NEW WRIT

Ordered,
	That the Speaker do issue his Warrant for the Clerk of the Crown to make out a new writ for the electing of a Member to serve in this present Parliament for the Borough Constituency of Glasgow, East in the room of David Marshall, who since his election for the said Borough Constituency has accepted the Office of Steward or Bailiff of Her Majesty's Manor of Northstead in the County of York .—[Mr. Hoon.]

Oral Answers to Questions

COMMUNITIES AND LOCAL GOVERNMENT

The Secretary of State was asked—

Home Information Packs

David Taylor: What recent representations she has received on the performance of qualified home inspectors and domestic energy assessors in the preparation of home information packs.

Iain Wright: The Department has received a number of representations in the form of correspondence from hon. Members, including my hon. Friend, and assessors. We have also conducted a number of meetings and workshops at which such issues have been raised.

David Taylor: As a past victim of serious delays and problems when moving house, I have been a supporter of the home information pack concept since its inception. In the past year, however, my constituents have alerted me to the fact that the reduction in fees for energy performance certificates is diluting the calibre of the people who produce them. Will the Minister tell the House whether he is satisfied with the regulation of a HIP market in which low-cost, unqualified people who are wholly without training are usurping professional domestic energy assessors, thereby misleading home owners and bringing the scheme into disrepute?

Iain Wright: I thank my hon. Friend for that important question. He will be aware that all domestic energy assessors and home inspectors have either gained a qualification in the subject or have proved to an accreditation scheme that they have the relevant skills and knowledge. On the important point about publicity for such qualifications, I am keen to encourage awarding bodies to consider something like a kitemark for high-performing training and assessment centres. I am discussing the standards for training providers with trading standards and the Qualifications and Curriculum Authority. I am more than happy to meet my hon. Friend to discuss the examples from his constituency.

Angela Watkinson: Estate agents in Upminster with whom I have discussed the matter all report that there is no demand whatever for home information packs, and that prospective house buyers prefer to employ a surveyor. What assessment has the Minister made of the national demand for HIPs?

Iain Wright: I disagree with the hon. Lady: when consumers actually see HIPs, there is demand for them. We need to encourage estate agents and others to show HIPs to home buyers and sellers. All the indications are that HIPs improve the home buying and selling process. Linked with energy performance certificates, they can provide suitable information to ensure that the biggest investment that someone is likely to make—buying a house—proceeds in as smooth a manner as possible.

Clive Betts: As my hon. Friend will know, I am a supporter of the HIP process. However, will he consider the experience of one of my constituents who bought a HIP from an estate agent for about £400 so that he could put his house on the market? He then switched to a second estate agent for very proper reasons. The second estate agent demanded that he pay another £100 to have the HIP validated, even though it was produced by accredited people. Does my hon. Friend agree that that sort of sharp practice gives estate agents a bad name? Will he investigate that matter, which I have written to him about, as it should not be happening in the marketplace?

Iain Wright: My right hon. Friend the Secretary of State for Communities and Local Government was muttering "sharp practice" when my hon. Friend was asking his question. They share similar thoughts on a range of matters regarding home buying and selling. My hon. Friend has been a passionate supporter of home information packs. He raises an important point, and we need to stamp out such practices as much as possible, particularly in the volatile and turbulent market that we have at the moment. I would be happy to meet him to discuss the specifics of the case that he raises, and to ensure that we deal with the matter appropriately.

Lembit �pik: As the Minister's colleagues have helpfully implied, HIPs are not popular and they are not demanded by house buyers. Along with all the other people whom he has agreed to meet, will he meet me to discuss  Which? magazine's interesting alternative proposals, which would simplify the process, make it much more relevant to the purchaser, and do away with the tons of irrelevant material that most people never require and that, for the reasons that he has heard, offer questionable quality control?

Iain Wright: I think that I will be very busy. I am always happy to meet the hon. Gentleman, but I think that he shares my view that the home buying and selling process should be as transparent, and the information as relevant and up-front, as possible. HIPs have gone a long way towards providing that. We fully accept that we need to go further to ensure better, more transparent home buying and selling services. I am happy to work with him and other hon. Members to achieve that.

Stewart Jackson: The Minister clearly has not read the comments of Sir Bryan Carsberg, who, as he will know, chaired the body that recently conducted a year-long independent review of HIPs. He concluded:
	They don't make a useful contribution to the house buying process. They don't speed up transactions and they are in danger of becoming out of date too quickly.
	The industry does not want HIPs, and buyers and sellers do not want them. Will the Minister finally admit that HIPs are slowing an already stagnant housing market, and that it is time they were dumped?

Iain Wright: We need to be sensible about this. About 750,000 HIPs have been produced in what we should all recognise is a very difficult market. HIPs and energy performance certificates are providing lower up-front costs for first-time buyers and falling costs for property searchesincidentally, I have just come from the fifth anniversary dinner of the Council of Property Search Organisations. Furthermore, if home owners carry out the changes proposed in the EPCs, there will be savings of around 100 million on energy bills.
	We will engage openly and constructively with all involved in the housing market to try to tackle the current global problems. If the hon. Gentleman wants to sit on the sidelines and snipe with undisguised glee, he can do that, but I want to get on with the job.

Eco-towns

James Paice: What plans she has to change the planning process for eco-towns.

Caroline Flint: None. Like any other proposed development, eco-towns will be subject to planning applications. Each application will need to be decided on its merits, and we would generally expect the local planning authority to make the decisions.

James Paice: It is obvious that the right hon. Lady will not be able to deliver eco-towns within a plan-led system, which is what I thought the Government wanted. The proposals for many of the sites, including Hanley Grange on the edge of my constituency, are simply a rehash of proposals that have already been rejected by the regional plan. If she is to proceed with this, is it not clear that she will have to override all existing planning processes and ignore local opinion, especially as all the local authorities already oppose the proposals?

Caroline Flint: I disagree with the hon. Gentleman. All the locations for prospective eco-towns are undergoing a thorough examination at the pre-application stage. I have suggested to local authority colleagues, community groups and others that they should engage with the process, because it is important to offer the hope of affordable homes and housing that can help us to meet our climate challenge. It is a shame that the Conservatives have decided not only to oppose the locationswhich they are doing virulently and without a great deal of evidencebut to oppose the whole programme. I think that that makes clear the derisory nature of their so-called support for more housing.

Patricia Hewitt: When my right hon. Friend considers proposals for an eco-town in Leicestershire, will she consider in particular the possible impact of the proposed development at Ashton Green in my constituency and, more broadly, its possible impact on the regeneration of Leicester? The eco-town proposal has many attractive features, but it must not take place at the cost of the development of Leicester, which is proceeding successfully despite the current difficult conditions.

Caroline Flint: My right hon. Friend is absolutely right. I can reassure her, and all Members, that the point of the process in which we are involved is to establish what the plans are, the impact that they will have on existing communities, and their possible impact on regeneration plans for other parts of the region.
	I strongly believe that despite claims that the process is not open, we are engaging in a very healthy debate. The developers and their plans are being scrutinised within an inch of their lives, not only by local communities but by local representatives and our Department, to ensure that when I decide on a final shortlist, they will be able to hold up their heads and demonstrate the standards that we should expect not just of eco-towns, but of any eco-development in the future.

Peter Tapsell: May I remind the Minister that, last Wednesday, East Lindsey district council, in which no one political party has an overall majority, voted by a large majority to ask that Manby in my Lincolnshire constituency be removed from the list of proposed eco-towns? As she probably knows because she was good enough to visit us recently, Manby is more than an hour's motor drive from the nearest mainline railway station and is in the middle of some of the best agricultural land in Europe, at a time when the world is facing food starvation. Can we therefore have an assurance that no devices in the planning system will be used to overcome the wishes of the overwhelming majority of local people not to have an eco-town in Manby?

Caroline Flint: The hon. Gentleman is right; I have visited the site. It is a former RAF base, part of which is already occupied by the local authority, which uses former RAF buildings as offices. When I visited the site, it was made clear to me that the local authority was undertaking this in a positive spirit because it recognised that it faced a real housing supply problem and that it had to look for alternatives to building out from the local market town of Louth, which is not far away. It is its choice to remove this option from the listwhich, I should make clear, was a local authority bidbut it will still have to recognise that it has a housing supply and affordability problem that it must address, and that the problem will not go away even though it has removed its bid for an eco-town.

Hugh Bayley: York has two large brownfield development sites which between them could provide 5,000 badly needed houses, but they cannot be considered as an eco-town because the sites fall within an existing urban area. What steps will my right hon. Friend take to ensure that the lessons learned from the eco-town process about building communities to high environmental standards at scale can be applied in urban areas such as York?

Caroline Flint: My hon. Friend makes an important point. One purpose of the eco-town programme is, of course, to provide more housing, but another is to look at what innovation can be brought to bear on making sure we have zero carbon across a whole development and on taking advantage of the opportunities that a site the size of 5,000 households at minimum can give us. We must look at what we can learn from this programme. Already in the past six months we have learned an awful lot about waste, water neutrality and about both the technologies that are currently available and those that are in the pipeline and that could be applied to the eco-town programme. As my hon. Friend says, we must learn about how they could be applied to new builds in existing communities or be retrofitted in existing communities. The benefits of the programme are to do with eco-towns, but they also offer a lot of potential for the built environment elsewhere.

Julia Goldsworthy: The Minister's Department likes to talk the talk about community empowerment and engagement, but it does not walk the walk. Is that not apparent in its approach to eco-towns? What does the Minister think speaks more loudly to the British public: a declaration of passionate commitment to the empowerment agenda, or the imposition of eco-towns against the will of the local community and its elected representatives through site-specific planning policy guidance that can then be overturned on appeal? Do not actions speak louder than words?

Caroline Flint: Nice speech, but completely wrong. The fact is that we have just completed one round of consultation in which we have received many different responses, and we will be consulting on a draft planning statement on eco-towns and a sustainability appraisal, which will take place. I am visiting every location and elected representatives have been asked if they want to be part of that. I have been meeting people who are opposed, but I have also been meeting people whose voices often are not heard: individuals and families who are on housing lists, and those who are living in other people's homessleeping on sofas and elsewheresuch as youngsters who have moved away from their families but cannot afford a home in their areas.
	I challenge anyone to suggest that we are not being inclusive, and that we are not allowing voices to be heard; but there is more than one voice in this debate. At the end of the day neither the Liberal Democrats nor the Tory party have any policies that attempt to meet the housing challenges of supply and affordability in this country, and that is a disgrace.

Jacqui Lait: The right hon. Lady is mounting a stout defence of a policy that is falling apart in front of her eyes. Will she comment on her Department's eco-towns panel, which recommended two weeks ago that eco-towns such as Curborough should be built not with one parking space per household but with none? How can she seriously believe that people will want to buy a house in the middle of nowhere if there is no space to park a car?

Caroline Flint: As the hon. Lady knows, if one selects from reports, one can pick and choose what slant one wants to put on the matter. The challenge panel has been tasked with testing out the developers on whether the plans deserve the brand of eco or whether they were trying to get another plan in under the radar. I thought that everyone wanted it to do that. One task the panel had was to press developers on how to reduce reliance on cars [ Interruption. ] No, it is interesting to hear from those on the Conservative Front Bench. They talk about sustainability and green politics but when they get down to the nitty-gritty of public transport and rail, they are not interested

Mr. Speaker: Order.

Community Regeneration

Sarah McCarthy-Fry: What recent steps her Department has taken to regenerate communities; and if she will make a statement.

Hazel Blears: I today announced 500 million over the next three years for the new deal for communities partnerships, which, along with the working neighbourhoods fund, support areas in building better places to live and offering more opportunities for local people. We will shortly publish a new framework for regeneration that will demonstrate how we will build further on that success.

Sarah McCarthy-Fry: I thank the Secretary of State for that response. Does she agree that the best community-led generation happens when the people who live in those communities make the decisions? How much of the funding that she has just announced will be made available for capacity building and to support people who live in those communities so that they have the skills and confidence to take the lead in making decisions?

Hazel Blears: My hon. Friend is not only right, but has a great deal of personal experience in building capacity in her community so that people can shape their futures. I was delighted to visit with her recently the Hillside youth centre in Paulsgrove. She has mobilised local young people to rebuild their youth centre. I can reassure her that, for all the funds in the new deal for communities and the working neighbourhoods fund, it will be vital that we are there to help local people to make decisions and determine the future for themselves.

Michael Fabricant: Will the Secretary of State come, too, to places such as Burntwood and Chase Terrace and see how important it is to regenerate such areas? Housing on brownfield sites could be built to the highest ecological standards. Will she also come with me to Curborough and see just why it is totally impractical to try to build an eco-town in the middle of nowhere where no roads are available?

Hazel Blears: The hon. Gentleman tempts me, as ever, to spend time visiting the sites that he has identified.

Michael Fabricant: We could go on our motorbikes together.

Hazel Blears: We certainly will not be going on our motorbikes together; that is for sure. I cannot promise that I will go to those specific areas, but I reassure the hon. Gentleman and the whole House that the eco-towns programme, as my right hon. Friend the Minister for Housing has said, is subject to intense scrutiny and proper examination. We have to make some difficult decisions, and we saw last week during the final stages of the Planning Bill the inability of the Conservative party to take difficult decisions.

Richard Burden: My right hon. Friend will know that she has hardly been able to walk past me or my hon. Friend the Member for Birmingham, Selly Oak (Lynne Jones) over the past few months without our badgering her about the Kings Norton new deal for communities project. I thank her for confirming 21.6 million for that project over the next three years. Will she confirm that the important thing now is that Birmingham city council and the other partners should get on with putting the project into practice? I echo, too, the point made by my hon. Friend the Member for Portsmouth, North (Sarah McCarthy-Fry). Local communities have to be partners in the process, not merely consultees.

Hazel Blears: I would not quite classify my hon. Friend as having stalked me around the corridors of the House of Commons, but he has done exactly what a good Labour MP should do, which is to call Ministers to account and to press his case. He has done that effectively. I confirm that the priority is to get on and to make the difference. The big capital investment in Kings Norton will significantly transform his area. We have discussed before in the House the importance of the development trust being able to lead the development and to shape it for the future in the way that local people want. That is how we get sustainability.

Khalid Mahmood: I thank my right hon. Friend for the announcement that she has made of additional spending in urban areas, particularly for regeneration. All her work in the past few years has been welcomed hugely in my constituency. Will she meet a delegation of councillors from Birmingham city council to discuss regeneration funding and, in particular, working neighbourhoods funding, which the local authority is not currently applying properly? She will be able to hear their concerns and discuss how we can move forward.

Hazel Blears: I will be delighted to meet my hon. Friend and discuss these very important issues with him. He, too, is a champion for his community. Let us not forget that the result of eight years of Labour investment in the new deal for communities has been significant changes in tackling crime, raising young people's educational achievements and raising people's satisfaction with their area. One thing on which we need to do more is tackling worklessness, which is why I am concerned that in the areas involved, local authorities in particular must work with Members and the community to give some of the people who have never had a chance the opportunities that we can offer them.

Social Housing

Jim Cunningham: What recent steps the Government has taken to increase provision of social housing.

Caroline Flint: The 2007 comprehensive spending review provided 6.5 billion for the delivery of 45,000 social rented homes a year by 2010-11. I recently announced that the Housing Corporation will have increased flexibility to help registered social landlords and others to purchase new homes from developers for social rent. It is expected that 200 million will be spent on that in 2008-09.

Jim Cunningham: I thank my right hon. Friend for that answer. Given the credit squeeze, what are she and the Government doing to maintain a house building programme for social needs?

Caroline Flint: What we can do is ensure that we use the money that we have available for our affordable housing programme to keep the market moving. I shall shortly announce a new set of actions that we will take to show that we have ideas about what happened last year and how the programme will go forward. Clearly, that will be affected by events here today, to which we must be able to adapt. I hope that the announcements that I shall make shortly will show that we are responding to the situation. We will build more affordable homes, for rent and to buy, but at the same time we will use our revenue and influence to ensure that we help the housing market at this difficult time.

Geoffrey Clifton-Brown: Will the Housing Minister undertake to examine objectively the cost of providing affordable houses in the eco-towns? If it turns out that they are much more expensive than affordable housing elsewhere, will that not drain the budget and make it much more difficult to meet the Government's overall target for affordable housing?

Caroline Flint: I will take that as support for affordable housing in eco-towns. Of course we look at price issues. I have said that the eco-towns should aim for at least 30 per cent. affordable housing, which could be for rent but will also include low-cost home ownership. That demonstrates the fact that, along with our aims on other fronts such as public transport and the environmental sustainability of eco-town projects, affordable housing is very important to this Government in any development, including eco-towns.

Paul Truswell: A number of new flats in my constituency remain unoccupied and planning permissions are not being progressed, presumably as a result of the current state of the housing market. Does my right hon. Friend accept that it is no use imposing overall housing targets on an area without being much more robust and specific about the number of social and affordable units that are needed to meet desperate housing needs?

Caroline Flint: Of course, we do not just impose housing targets out of nowhere. We have in place an assessment that takes into consideration the housing needs of communities, and I suggest to my hon. Friend's local authority and others that they ensure that they undertake that assessment. The planning guidance and other help that we have given them enables them to influence what sort of housing is built. If local authorities all got on with developing their local development framework, that would give a much better indication of their vision for their community. When developers made proposals, local authorities would then be in a stronger position to argue against the sort of housing that might not meet local needs.

Tim Farron: Three quarters of the homes in my constituency that were built as social rented properties have been sold off. As a consequence, the supply of social rented properties locally is inadequate, and one in three of the young people we lose never return because of the lack of affordable housing. Does the Minister accept that it is very important to ensure that homes built to be social rented properties remain affordable, and that community land trusts perform an excellent role in ensuring that such homes are protected from the vagaries of Government policy? Will she undertake to give legal and financial support to the development of community land trusts?

Caroline Flint: Not only do we recognise the importance of CLTs as a model for the support of local affordable housing, we are doing something about it. We are already working with a number of CLTs of various sizes around the country. My hon. Friend the Under-Secretary of State for Communities and Local Government, the hon. Member for Hartlepool (Mr. Wright), has been engaged with this matter as part of his work on the Housing and Regeneration Bill. We will do more in this area, but I am proud to be part of a Government who are prepared to look at many different options that offer people the chance to have housing in their communities. Importantly, we are working to ensure that communities realise that affordable housing is an asset that should be kept not just for the next five years but in perpetuity.

Dari Taylor: What consideration is the Department giving to the CDS Co-operatives housing project, which provides social housing and allows people to buy or part-rent according to their income? The housing remains permanently in a community trust, and thus is an asset for everyone in the community.

Caroline Flint: I know that my hon. Friend the Under-Secretary has met representatives of the project to which my hon. Friend refers. Her example demonstrates that housing for people in the 21st century should be varied. It might be provided by the local authority, a housing association, a CLT or a co-op, but different models of home provision are exactly what we need if we are to open up the market. I have worked with co-ops to tackle worklessness and social housing. Their excellent work has had an important influence on showing how social housing can be a springboard to further opportunities for people.

Adam Price: Sixty years ago, Aneurin Bevan came up with his other big ideaa national housing service that was publicly owned and run, and a massive house building programme managed by central Government. He modelled his approach on his ideas for health, so can the Minister explain why the Governmentofficially at leastare Bevanite on health but Thatcherite when it comes to the stock transfer of council housing?

Caroline Flint: Well, considering where we started from in 1997, I think that we have made huge inroads. We inherited a backlog of repairs to local authority housing stock worth 19 billion, 2 million homes were below basic standards of decency, and the Conservative Government started to cut their affordable housing programme in the 1990s. We have made progress, through our decent homes programme and the measures that we have taken to increase social housing. About 250,000 homes have been made available through registered social landlords, but the work does not stop there. That is why, among other measures, we are working with CLTs, housing co-ops and local housing companies, and the 6.5 billion that we have put into such schemes demonstrates that this Labour Government are on the side of people who need housing.

Interfaith Strategy

Celia Barlow: What progress has been made in developing an interfaith strategy.

Parmjit Dhanda: The consultation on the interfaith strategy closed on 7 March. We plan to publish the strategy in July.

Celia Barlow: Is my hon. Friend aware of the work of Hope 2008, an organisation that supports the voluntary work of the Churches in Britain? Every year, churches, mosques, synagogues and temples perform a very valued service in the community, not least in my constituency of Hove and Portslade. What will he be doing to support that valuable organisation's work?

Parmjit Dhanda: I congratulate my hon. Friend on the work that she does in Hove, and she is right to say that Hope 2008 does excellent work, which underpins and is very much in tune with our work on an interfaith framework. We have adopted a phrase coined by the Chief Rabbi and believe that organisations should work face to face as well as side by side, in the sort of collaborative action supported by Hope 2008. As I said, we will unveil our interfaith strategy later this month and, alongside it, details of the multi-million pound pot that will support that work.

Gary Streeter: But given what the Minister has just said about outcomes that faith groups can achieve, will he ensure that not only Government, but local government provide equal access for faith groups that care for some of the most vulnerable people in our community every day? Those groups often face prejudice when accessing resources and funds. Will he do something about that in the interfaith strategy?

Parmjit Dhanda: The hon. Gentleman makes a fair point, and it is one that is made to me regularly by our Faith Communities Consultative Council. It has been very supportive of the work on the interfaith framework, and its ideas are being put into practice in the framework, as he will see in a few weeks. He is right to say that there is more that we can do with our faith communities. We are committed to that, and I have seen the very good work that they have done, not least during the floods last yearincluding in my constituency. The council has also been involved in planning for a possible flu pandemic and how we would approach such an emergency. The engine for that work was the faith communities in the first place. They have written reports and are working with us. When we publish the report, I hope that the hon. Gentleman will see that, like a stick of rock, it has their work, commitment and values running through it.

Ann Cryer: Does my hon. Friend agree that interfaith strategies in the north of England would have a greater chance of success were Muslim women welcomed into their mosques?

Parmjit Dhanda: I agree with my hon. Friend. In fact, my right hon. Friend the Secretary of State has done a great deal of work in that respect, including setting up the National Muslim Women's Advisory Group, which is working closely with the Department. I have been pleased to see some of the interfaith work that is being done in the north of England, especially around the mosques and madrassahs. However, my hon. Friend is right that we can do much more with Muslim women. I hope that the work of the Mosques and Imams National Advisory Board will also make a real difference in that context.

Patrick Cormack: Has not everything that the Minister has said pointed to the danger of imposing some form of strategy from above? Instead we should encourage local communities, churches and others, bearing in mind that we have an established Church, to develop their own approach to those of other faiths.

Parmjit Dhanda: That is why the title of the initiative has changed from a strategy to a framework. That is something that the faith communities wanted, and they have been at the heart of driving this work. I am pleased to say that we have had some 185 responses to the framework consultation, but the hon. Gentleman will find that local activity is at the heart of it. It is about collaborative social action being supported by local authorities and run at a local level, although it is supported financially at times by the Government.

James McGovern: Last week I attended a function organised by my constituents, Mr. and Mrs. Abubaker, as part of their charitable fundraising efforts in memory of their son, Yusef, who tragically died aged 12 playing his beloved sport of football. In attendance at the function were members of the Syrian, Malaysian, Chinese, Palestinian and, of course, Scottish communities of Dundee. Does the Minister agree that the efforts of Mr. and Mrs. Abubaker are an example of how we can bring together wide and varied communities, regardless of ethnic origin, creed or colour?

Parmjit Dhanda: I thank my hon. Friend for discussing this matter privately with me yesterday. I wish to pass on my condolences and, I am sure, those of the whole House to Mr. and Mrs. Abubaker on the loss of their son. I was fortunate enough to see the website that has been set up describing some of the activities that are happening in their son's name in Dundee, which range from touch rugby tournaments to Arab food tasting. The website lists Yusef's favourite charities and his hobbies, and the work that is being done in his name, bringing different cultures, races and faiths together, is a brilliant example from which we can all learn.

Paul Goodman: First, I am sorry to hear about the death of the son of the constituents of the hon. Member for Dundee, West (Mr. McGovern).
	The Minister will know that trust between the Government and faith communities is essential if the interfaith strategy is to work fully. He will also note that the Education Secretary recently claimed to have found shocking evidence of faith schools asking parents to pay for school places. In the case of some Jewish schools, this evidence turned out to be voluntary contributions towards school security measures against potential attacks by violent extremists. So will the Minister kindly pass on a message to the Education Secretary? For the sake of the interfaith strategy as a whole, he should stop knocking faith schools in order to build up his own Labour party leadership ambitions.

Parmjit Dhanda: I fear that the hon. Gentleman's remarks may not have been as bright as his suit on this occasion.

Paul Goodman: Or your tie.

Parmjit Dhanda: Indeed. I thank the hon. Gentleman.
	I will be talking to the Secretary of State for Children, Schools and Families in due course, not least to congratulate him on and thank him for the work that he has been doing with our Department on the school twinning programme and on cohesion projects, not least sending two sixth formers from every sixth form in the land to Auschwitzsomething that I believe the Leader of the Opposition called a gimmick.

West Northamptonshire Development Corporation

Brian Binley: What steps her Department has taken to monitor planning decisions made by the West Northamptonshire development corporation.

Iain Wright: West Northamptonshire development corporation is currently considering planning applications for more than 25,000 dwellings, which is one of the biggest growth pipelines in the country. I therefore recently met the chair and chief executive of WNDC to discuss the issue, and continue to take a close interest.

Brian Binley: The WNDC, set up under the sustainable communities project, recently received an application for Grange Park village for a mixed development, including 450 houses. It was opposed by local residents, all the local authorities, Anglian Water, the Environment Agency and the Highways Agency, on the basis that the project was unsustainable. The Minister will not be surprised to hear that the project was passed almost unanimously. The total rejection of local opinion in decision making

Mr. Speaker: Order. I think that the Minister will be able to answer from what the hon. Gentleman has already said.

Iain Wright: I understand that on 21 May the hon. Gentleman wrote to my right hon. Friend the Secretary of State on this matter. He will know that the basis of planning applications and the possible quasi-judicial role of the Secretary of State mean that I cannot possibly comment on the merits or otherwise of Grange Park.

Peter Bone: In Northamptonshire, local councils have a planning policy with strategic green areas between major developments. Why is it that the Government have just published their core spatial strategy and overruled that policy?

Iain Wright: The hon. Gentleman will know, as I know, that the Government take the importance of green belt and greenfield sites extremely seriously. We have a policy that the majority of development should be on brownfield landsomething like 60 per cent. of all new developmentand, at 75 per cent. in the past couple of years, we have exceeded that target considerably. I hope that the hon. Gentleman will join me in congratulating local authorities and developers on helping to ensure that development is brownfield first.

Social Housing

Simon Hughes: How many families are on social housing waiting lists.

Caroline Flint: On 1 April 2007 there were 1.67 million households on the waiting list for social housing in England.

Simon Hughes: I hope that the Minister realises that that is equivalent to 60 per cent. more people on waiting lists in England than in the past, that in London there has been a near doubling of people on the waiting lists since Labour came to power, from 181,000 to 333,000, and that in my borough over the same 10-year period the number of those on the list has gone up from 3,700 to 8,900. Will the Minister be far less complacent about Labour's abysmal record of providing social housing and realise that, unless the Government do fantastically differently in the next two years, they will be regarded as absolute failures in looking after the people of this country, who expected more from a Labour Government?

Caroline Flint: I think that I could be accused of a lot of things, but complacency is not one of them. Clearly the pressure on our housing list is concerning, which is why we have doubled the amount of money that we can spend on affordable housing. As I said to my hon. Friend the Member for Pudsey (Mr. Truswell), however, we also have to look at the different types of housing that we provide to people. The waiting list is not an indicator of absolute need. Since [Interruption.] If the hon. Member for Falmouth and Camborne (Julia Goldsworthy) listens, she will hear the answer.
	Since 2003, households have been able to apply to any local authority's waiting list, which has obviously contributed to some of the rise. On top of that, people are living longer so we often have to find housing for four generations of families compared with three generations years ago. Single-person households now make up 72 per cent. of new household projections. Unfortunately, part of that is because love does not last, people break up and there are more divorces. We are dealing with a very different set of demographics but we have shown that we are putting money behind the initiatives and, like the hon. Member for North Southwark and Bermondsey (Simon Hughes), I await with anticipation Mayor Johnson's plans for affordable housing in London.

Brian Jenkins: My right hon. Friend must realise that the only way in which to bring the waiting list down is to build more houses. Now that we are entering a period when the house building sector is slowing down, many building companies will make very competitive tenders for public sector housing, so will we work with local authorities to ensure that we can build those houses and reduce the waiting lists?

Caroline Flint: Yes, we will work with local authorities. Certainly, some of my discussions over the past month or so have been about the role that local authorities could play both in supporting people who may find themselves in difficulty regarding their mortgage payments and also in working with us to make sure that existing building projects go ahead and on how we can use our muscle in terms of our affordable housing programme not only so that homes are built but also so that we keep people at work in the building trade.

David Curry: But is not the recession in the housing market bound to be bad news for people who cannot afford a home at market prices? About 50 per cent. of all affordable homes in Britain are by-products of homes built at market prices, and if the Government do not think a little more long term about how those markets might be decoupled so that the social and affordable sector does not depend entirely on the health of the market sector, the misery and misfortune of people who would normally be able to afford a home will inevitably be multiplied in families who cannot afford their home.

Caroline Flint: I welcome the right hon. Gentleman's genuine concern about the affordability of housing. That is why we have helped about 110,000 people on to the housing ladder through our various shared equity and shared ownership schemes. It is interesting to note that despite the current situation a third of transactions are being undertaken by first-time buyers, so there is already some movement in the market. However, just as in May, when I announced an expansion of 100 million in our Open Market HomeBuy package, which helps many people on to the affordable housing ladder, so I shall be making further announcements in the not-too-distant future about what more we can do to help people to have a home of their own. For the long term, I hope that the present crisis will help us to talk with lenders and house builders about different models for home ownership in the future.

Topical Questions

Kerry McCarthy: If the Secretary of State will make a statement on her departmental responsibilities.

Hazel Blears: My Department will continue to focus on regeneration, housing and preventing violent extremism. I am delighted to announce today 500 million for the new deal for communities.

Kerry McCarthy: My right hon. Friend will be aware that at present local authorities accept people for priority rehousing on grounds of homelessness only when they have reached the wirewhen they have had to fight legal proceedings right up to the eleventh hour and the bailiffs are knocking at the door. That causes great anxiety for families who already face the threat of eviction or repossession, so does my right hon. Friend's Department have any plans to review the situation?

Iain Wright: I thank my hon. Friend for that question. A couple of weeks ago, I was in Bristol looking at the great work on homelessness that is being done with the local authority. My hon. Friend will be aware that current homelessness legislation provides a strong safety net for families with children and for vulnerable people. As soon as the local authority is satisfied that homelessness is likely within 28 days, it must take steps to ensure that the applicant and his or her household will continue to have somewhere to live. However, I understand her concerns and we are working with the Ministry of Justice, the Council of Mortgage Lenders and others to provide and develop mortgage rescue packages to prevent homelessness in the first place. Alongside the biggest-ever cash injection for homelessness services, I am sure that will help to minimise as much as possible the risk of repossession.

Eric Pickles: I wonder whether the Secretary of State has had time to look at the latest survey by the Local Government Association, which has branded 24-hour drinking a failure. The LGA survey warns that violence continues to blight the streets leaving taxpayers with a completely unacceptable 100 million bill. On top of that, local authorities have lost 43 million in licensing costs. Does the right hon. Lady believe that 24-hour drinking is a social experiment that has failed?

Hazel Blears: The hon. Gentleman will be very well aware that the number of 24-hour licences in this country is tiny. There has been a relaxation of licensing provisions so that people can now drink at different times. If he talks to the police, he will find that in his area, as in mine, they are pleased that we now have staggered closing times, and that we do not see the scenes on the streets that we used to see when people all came out of premises at the same time. We now have a better system for managing our night-time economy, which means the local authority, the police, trading standards and environmental services all working together on the issue. That is the practical approach, rather than an approach in which figures are plucked out of the air.

Eric Pickles: It is fortunate that the Local Government Association talked to local police and trading standards. The overwhelming majority of health authorities and councils reported pressure on resources. The right hon. Lady cannot kid herself any longer: our towns are nightly turned into vomitoriums, with brawling and bad behaviour. In March 2004, she said that the reforms would create a continental caf-bar culture. How did her dream of a nation at ease with itself, gently sipping chardonnay, turn into something more like chucking-out time in Deadwood?

Hazel Blears: If the hon. Gentleman thinks that my dream is of people gently sipping chardonnay, perhaps he has not often been on a night out in Manchester, and perhaps he needs to go on one. I can tell him that a night out in Manchester is now a much more pleasant experience, because the police are active on the streets, the local authority has introduced a best bar none award in which bars are rewarded for managing their premises properly, and people can go out and thoroughly enjoy themselves in a safe environment. That is about making practical policies that work on the ground, with people working together. Local authorities' trading standards departments have done an excellent job of cracking down on some of the off-licences and pubs that have been serving drink to under-age youngsters. We need to tackle those kinds of problems, while allowing the vast majority of people who go out, have a drink and enjoy themselves to do just that.

Katy Clark: My right hon. Friend will be aware of the current local government pay dispute, and will know that two days of strike action are scheduled for July. Does she agree that we need a resolution to the dispute, and will she call for negotiations to be opened?

Hazel Blears: We are all very disappointed that we face the prospect of industrial action, as the services that local authorities provide clearly impact on people who can sometimes be very vulnerable. I hope that all parties can get together and find a resolution. Clearly, settlements must be affordable, and we must be conscious of the dangers of inflation in the economy. However, if we can resolve the issue without industrial action, that would clearly be in everyone's interests.

Simon Hughes: In addition to failing to cope with waiting lists, the Government have, in 10 years, presided over a 10 per cent. reduction in the amount of social housing in England. Council housing has gone, so that there are now only three families in council houses for every seven that there were 10 years ago. Given all that, do the Government feel no embarrassment or shame about having been so dreadful? Is there any chance of a real acceleration of programmes, so that people can have housing built in their communities, as it used to be, including under the Macmillan Tory Government?

Caroline Flint: The 6.5 billion that we are putting behind the affordable housing programme is an indication of what we are providingand that is just for social homes for rent. We are also doing work to enable local authorities to use their land assets, through local housing companies, to build more homes. I am sure that the hon. Gentleman would acknowledge that in 1997 we inherited a situation in which 19 billion-worth of repairs had to be made to existing housing stock. We have enabled more than 20 billion to be spent on transforming the living conditions of many social tenants. Sometimes in government, one has to make choices about priorities. Having done that work, we are now in the middle of a programme that will offer many more thousands of homes, with up to 45,000 homes a year being built for social rent by 2010-11. That is a strong indication that we are able to make tough choices. At the forefront of our minds is the question of how we make sure that everybody, regardless of whether they are home owners, has a chance to have a decent roof over their head.

Rob Marris: What steps has the Department taken to allow more local control over planning decisions about applications to build in the back gardens of houses?

Caroline Flint: My hon. Friend will be aware that we have strengthened the guidance in that area, and we urge local authorities to use it. Again, however, to strengthen the arm of local authorities, it is very important that they undertake their strategic housing assessment so that they can demonstrate that they are not only up to speed on housing needs locally, but actively engaged in the question of where the housing should go. Alongside that, we are working with local authorities to identify the land banks that are available to them for the location of future housing. If that work is done, it could strengthen the arm of local authorities to deal with the applications that come in. In the absence of a strategic housing assessment or of that land bank work, some people win their applications, to the dismay of some local authorities.

Laurence Robertson: May I ask when the Secretary of State intends to publish her findings on the south-west regional spatial strategy? When she does, will she take into account the terrible flooding, of which she is well aware, in Tewkesbury, where there are proposals to build thousands of extra houses, including thousands very close to the Walham sub-station that very nearly went under? If it had have gone under, the county probably would have been evacuated. Will she take all those points into account when she publishes her findings?

Hazel Blears: Yes, I can certainly reassure the hon. Gentleman that we have taken a number of steps to ensure that our planning framework for dealing with flooding is strengthened. We have a new planning policy statement, which is now working, and the hon. Gentleman will also be aware that the borough council in his constituency has been allocated just over 1 million to help it with the cost of dealing with the flooding that took place in his constituency. Obviously, we have 31 million for flood restoration, too.
	I am concerned that one year on, some people remain out of their homes. We are determined to do everything that we can about that, but we have managed to ensure that the vast majority of people are back in their homes and resuming their normal lives. I can assure the hon. Gentleman that the spatial strategy, which will be published extremely soon, will take into account the issues that he has raised.

Helen Southworth: Will my right hon. Friend look at the urgent need in Warrington for more shared equity homes, and at the need for our local authority to be more effective when giving planning consent in order to ensure that any consent for affordable housing is delivered on, and that the houses are retained in the affordable sector?

Iain Wright: My hon. Friend raises an incredibly important point. Through the planning framework and measures such as planning policy statement 3 and others, the local authority is absolutely key to ensuring that it has the homes that it needs in its area, taking into account local circumstances. Shared equity and affordable housing schemes are absolutely key, too. I have been to Warrington and seen what is going on, and I suggest that, frankly, Warrington borough council needs to do more to ensure that those affordable housing and shared equity issues are addressed. I commend my hon. Friend and her constituency neighbour, my hon. Friend the Member for Warrington, North (Helen Jones), for their sterling work on the subject.

Peter Bone: The Broadholme sewage treatment works in my constituency will reach its capacity by 2010, but according to the Government's Northamptonshire core spatial strategy,
	an expansion of the Broadholme...treatment works is unlikely to be achieved before 2013.
	What are my constituents expected to do between 2010 and 2013put a peg on their nose and cross their legs?

Hazel Blears: I would not dream of giving the hon. Gentleman's constituents such advice. Clearly, in the growing areas of our communities, it is important to ensure that there is proper infrastructure, including transport, education provision and the vital service of sewage disposal and treatment. I was going to say that I would take it away and look at it, but perhaps I should ensure that it is properly dealt with. I am grateful to the hon. Gentleman for raising the issue.

Helen Jones: When the Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Hartlepool (Mr. Wright), visited my constituency recently, he took a great interest in the future developments at Bruche, and he promised to monitor them. Will he take steps to ensure that affordable and social housing developments built there and in other places are of the best possible quality and that we do not return to some of the cheap and nasty stuff that was thrown up in the past?

Iain Wright: During my visit to my hon. Friend's constituency I was interested in that development, which is not only exciting for Warrington but very significant for the whole north-western strategy for affordable housing. My hon. Friend raises an incredibly important point: the issue is not only about numbers but about design and good-quality planning, which are also important. The local authority has a key role to play in that. I really enjoyed my time in Warrington; I hope that I will be invited again, because I want to keep a close eye on the development.

Robert Goodwill: Up and down the country, local authority environmental health officers are visiting farm house bed and breakfasts and telling the proprietors that the family pet can no longer occupy its traditional place in the dog basket by the Aga. That is because the floor of the kitchen has been designated as a food preparation area. Was that decision made in the Department or by the local authorities? Does the Secretary of State agree that the situation is completely barking?

Hazel Blears: I am sure that the hon. Gentleman will agree that it is essential that high standards of food hygiene are maintained where there are customers, and I am sure that he wants to ensure that that happens. He will also agree that it is important that legislation should be proportionate to the issues that it is designed to address. Clearly, our food hygiene rules are important. I will gladly look at whether they should relate to where the dog can sit, but we must not underestimate the need for our communities to ensure proper, good and high standards of food hygiene for the premises that they use and the places where they stay.

Graham Allen: My right hon. Friend will be aware that Nottingham, North has the highest concentration of challenged schools; that was announced two weeks ago by the Secretary of State for Children, Schools and Families. Will she say how other Departments can work with the Department for Children, Schools and Families to ensure that sorting out educational attainment becomes everybody's problem, rather than being seen as something that rests purely with education?

Hazel Blears: As ever, my hon. Friend raises an important issue, for which there must be an integrated approach across Government Departments and local public services. He is right that there is a very high number of challenged schools in his constituency, but Nottingham city schools also have one of the highest rates of improvement in the number of children getting five GCSEs. Yes, the base is low, but the city is doing extremely well in making progress. My hon. Friend has already met the Secretary of State for Children, Schools and Families. Mine is the corporate Department co-ordinating the local area agreement process, and I will ensure that there is a co-ordinated response. My hon. Friend is absolutely right: early intervention and supporting young people is the way forward to improve our communities now and in the long-term future.

Sandra Gidley: My local council is advising families who are given notice to quit by a private landlord to stay put until legal action is taken. Will the Minister do her best to outlaw that practice, which is unfair on landlords and tenants?

Caroline Flint: The hon. Lady will be aware that we are doing a review of the private rented sector at present, and I will be looking to that for ideas about how to tackle theto put it mildlyless reputable landlords, and, more positively, for ideas about what contribution reputable landlords could make to our provision of housing in partnership with local authorities and others. I shall consider the point that the hon. Lady has raised and write to her about it.

Point of Order

Anne McIntosh: On a point of order, Mr. Speaker. Last week, I saw on the Order Paper that I had been fortunate enough to have a question selected for a response, most likely from one of the Under-Secretaries of State. The question related in every particular to the responsibilities of his Departmentto a British standard for flood-resistant products in connection with planning policy statement 25. Imagine my surprise when I saw that my question was no longer to be taken today. I have not had an explanation. If I do not get a satisfactory explanation, will you, Mr. Speaker, look kindly on the issue as a subject for a future Adjournment debate?

Mr. Speaker: Transferring is a matter for a Department, but it is my understanding that the hon. Lady, or any hon. Member, should be notified. I will look for an explanation as to why she was not notifiedthat is unacceptable.

Transparent Taxation (Receipts)

Nigel Evans: I beg to move,
	That leave be given to bring in a Bill to make provision for all receipts printed in the United Kingdom to contain a figure for the total amount of tax paid on the goods and services purchased.
	I declare my interest as the owner of a small retail store in Swansea.
	The purpose of the Bill is to ensure that taxation is as transparent as possible. People rightly want to know how their money is spent, but it is also essential for the Government to be open about how that revenue is raised. The Government estimate that the Treasury's receipts for 2007-08 will be 549.9 billion, projected to rise to 575.2 billion next year. The Bill would be particularly relevant to purchases that are subject to multiple taxes and duties. I am thinking specifically of fuel, tobacco and alcohol, which are everyday items bought, at one time or another, by the majority of the population. Each purchase soon adds up. On those products alone, the Government will rake in an estimated 41.2 billion in 2007-08. That is a huge amount of people's hard-earned money, and they deserve to see exactly how it is collected.
	The Bill would benefit the taxpayers of this country and have few, if any, cost implications for major businesses. It would not be an extra burden but merely a hassle-free way of making government as open as possible. Smaller businesses would not be targeted by any potential legislation; safeguards would be put in place to ensure that they were not adversely affected. Placing the amount of tax generated on each receipt next to the total price would make people better able to see how and where their taxes are collected. It is important that people see where their money is going; in that way, a Government can be held fully accountable.
	In researching the Bill I have consulted representatives of the Adam Smith Institute and the TaxPayers Alliance, both of which have given their unequivocal support to the measures that I seek to introduce. Both those organisations have said that taxation should be more transparent and that people should have a right to know how much tax they are paying on a particular product. One of the most interesting concepts that surrounds taxation is that of tax freedom day, which shows how long we have to spend working for the Treasury before our money becomes our own. Last year, that meant working from 1 January until 4 June just to pay our tax bill. It is that sort of realisation that hammers home the need for open and understandable taxation.
	I should like to take the three main products one by one. Fuel duty currently stands at 50.35p per litre and is scheduled to rise by 2p in October of this yearunless  The Independent is wrong, Ministers get their way, and there is yet another U-turn. Then, of course, there is VAT at 17.5 per cent. As with all goods subject to dutiesI suspect that a large number of people do not realise thisthe Government tax the duty as well. Rather than paying VAT on the basic price of the fuel, we pay it on both the basic price and the 50.35p. In April 2008, according to the Library, unleaded petrol retailed at an average of 107.6p per litreremember those heady days?and the average diesel price was 116.5p per litre. According to further figures provided by the Library, the pre-tax price would be 41.2p per litre and 48.8p per litre respectively. Putting those figures into context and including VAT, that means that 62 per cent. and 58 per cent. of the money that people pay for their fuel goes to the Treasury. As people will know, during the past few months, while I have been researching this Bill, fuel prices have risen considerably to about 1.20 per litre for unleaded and as much as 1.34 for diesel.
	My Bill would ensure that people were aware of the rising amount of tax that the Government are creaming off. As a practical example, let us assume that I went to the petrol station and put 20-worth of unleaded petrol in my car. For the most part, the receipt would mention only the amount of VAT but, as I have stated, that is only a minor part of the taxation. Under the Bill, the bottom of my receipt would read, Total20.00; total tax take12.40. There would be no hidden costs, and when the Government talked about 2p rises the public would be able to see the exact effect as soon as it came into force.
	Tobacco is exactly the same. For those without a degree in economics, tobacco taxation is especially complicated. There are two duties on cigarettes. As of 12 March 2008, the specific duty is 112.07 per 1,000 cigarettes, there is an ad valorem duty of 22 per cent. of the retail price andlest we forgetVAT. The Institute for Fiscal Studies has calculated that a packet of 20 king-size cigarettes would be subject to 217.03p specific duty and 109p ad valorem, which suggests that the VAT on a 4.95 packet of cigarettes is 86p. Under the Bill, the receipt would read, Total4.95; total tax take4.12.
	The Budget immediately raised alcohol taxes by 6 per cent. above inflation, and there will be a 2 per cent. rise above inflation every year until 2013. That is projected to lead to a 600 million rise in revenue for the Treasury by 2008-09. From 17 March 2008, alcohol duty rates are 14.96 per 100 litres of beer and, on wine and spirits, 21.35 per litre of pure alcohol. To most normal people, such figures and statistics are not grounded in reality and everyday life. The Institute for Fiscal Studies has estimated that we currently pay 30.04p on every pint of beer, 134p on bottles of wine and 548p on bottles of spiritsand then there is VAT. Under the Bill, a receipt for a pint of beer that cost 3 would state, Total tax take83p.
	As with any proposed legislation, it is important to think about the unintended consequences. In the scenario that we are considering, the consequences would be minute, if not non-existent. As many hon. Members know, I am a convenience store owner in Swansea. I know that our till can be programmed to produce the type of receipt to which I have referred with minimal cost to the business, and that it could be done during the next servicing of the till. For businesses whose tills are not capable of that change, there would be no requirement to upgrade and no forced time limit, but the Bill would provide that when they purchased new machinery that could produce the requisite receipts, the till should be programmed accordingly. That way, smaller businesses would not be hit with an additional business cost, but naturally progress to the system that I propose.
	Let me take the opportunity to reassure the House that there is no intention to impose any negative effect on small businessesafter all, they employ 58 per cent. of the UK's private sector work force. However, it would be in the spirit of the Bill for smaller premises to display signs that specified the tax take on average cigarette, alcohol and fuel products. By the same reasoning, there will be no additional cost to the companies that make the tills. The technology required for that is already available and used in a huge number of tills.
	That leaves the consumer. I do not believe that a single argument could be made to suggest that the Bill would not be beneficial to consumers. It represents an uncomplicated way of creating a more transparent taxation system, in which the general population can experience at first hand exactly how, where and when they are being taxed. It will lead to greater understanding of the taxation system and, I hope, mark the beginning of the end of stealth taxes, with which the incumbent Government have become synonymous.
	There is not enough time to go through examples of every tax, and no one would want me to do so. [Hon. Members: Go on!] Well, we certainly do not have time to go through all the taxes that the Government have introduced since they came to power in 1997.
	The Bill is in the spirit of open government. It is relatively cost and hassle free, and there would be great benefit to the public with no extra burden on them or the retailer. In short, it is a simple measure that would lead to a better understanding of the tax system, allow transparency and provide greater appreciation of how taxes are collected. At a time when hard-working families are feeling the pinch of higher prices on food, fuel, energy, tobacco and alcohol, it is only right that the Government should also tighten their belt, and let the public see the total tax as well as the total tax spend.
	 Question put and agreed to.
	Bill ordered to be brought in by Mr. Nigel Evans, Mr. Brian Binley, Mr. Graham Brady, Mr. Christopher Chope, Philip Davies, Christopher Fraser, Mr. Paul Keetch, Patrick Mercer, Mark Pritchard, Mr. Robert Syms, Ann Winterton and Sir Nicholas Winterton.

Transparent Taxation (Receipts)

Mr. Nigel Evans accordingly presented a Bill to make provision for all receipts printed in the United Kingdom to contain a figure for the total amount of tax paid on the goods and services purchased: And the same was read the First time; and ordered to be read a Second time on Friday 17 October, and to be printed [Bill 127].

FINANCE BIILL  [WAYS AND MEANS]

Resolved,
	 Income tax: basic rate limit
	That provision may be made in the Finance Bill about the basic rate limit. [ Jane Kennedy .]
	 Resolved,
	 Effect of transfer of rights to payment etc
	That provision may be made in the Finance Bill about cases in which a right to be paid, repaid or credited with a sum by the Commissioners for Her Majesty's Revenue and Customs has been transferred from one person to another. [ Jane Kennedy .]
	 Resolved,
	 Insurance special purpose vehicles
	That provision may be made in the Finance Bill for the making of provision (including provision having retrospective effect) in relation to insurance special purpose vehicles. [ Jane Kennedy .]

Orders of the Day

Finance Bill
	  
	[1st Allotted Day]

Not amended in the Committee and as amended in the Public Bill Committee, considered.
	 [Relevant document:  Thirteenth Report from the Treasury Committee, Budget Measures and Low- Income Households, HC 326.]
	 Ordered,
	That the order in which proceedings on consideration of the Finance Bill are taken shall be: New Clauses relating to income tax; amendments relating to Clauses 1 to 3 and Schedule 1; New Clauses relating to the powers of HM Revenue and Customs; amendments relating to Part 7; New Clauses relating to inheritance tax; amendments relating to Clause 8 and Schedule 4; New Clauses relating to information about and simplification of taxation; amendments relating to Schedule 3; New Clauses relating to vehicle excise duty and fuel duties; amendments relating to Clauses 15 and 75 and Schedules 7 and 17; remaining proceedings. [ Jane Kennedy .]

New Clause 11
	  
	Personal allowance for those aged under 65

'(1) For the tax year 2008-09 the amount specified in
	(a) section 35 of ITA 2007, and
	(b) section 257(1) of ICTA,
	(personal allowance for those aged under 65) is replaced with 6,035.
	(2) Accordingly
	(a) section 57 of ITA 2007, so far as relating to the amount specified in section 35 of that Act, and
	(b) section 257C of ICTA, so far as relating to the amount specified in section 257(1) of that Act,
	(indexation) do not apply for the tax year 2008-09.
	(3) This section does not require a change to be made in the amounts deductible or repayable under PAYE regulations before 7 September 2008.'. [Jane Kennedy.]
	 Brought up, and read the First time.

Jane Kennedy: I beg to move, That the clause be read a Second time.

Mr. Speaker: With this it will be convenient to discuss the following:
	Government new clause 12 Basic rate limit.
	New clause 1A Interim statements to Parliament 
	'On any occasion when the Chancellor of the Exchequer or a Treasury Minister announces to Parliament any change or intended future change to
	(a) income tax rates,
	(b) income tax thresholds, or
	(c) income tax personal allowances,
	other than in the course of a statement to Parliament presenting a Budget or Pre-Budget Report, the Treasury must publish a current forecast of
	(a) public sector net borrowing,
	(b) growth rate of gross domestic product, and
	(c) consumer price inflation,
	for the current fiscal year and each of the subsequent four fiscal years, updated to take account of that announcement.'.
	New clause 4 Income tax rates 
	'(1) The amendments made by the provisions of this Act specified in subsection (2) shall cease to have effect at midnight on 5 January 2009 unless the conditions set out in subsection (3) have been satisfied.
	(2) The provisions referred to in subsection (1) are
	(a) section 3(2) and (3), and
	(b) section 3(7)(a) and Schedule 1 (in so far as they relate to the starting rate).
	(3) The conditions referred to in subsection (1) are that
	(a) the Chancellor of the Exchequer shall have laid before the House of Commons a statement setting out the measures taken, or intended to be taken, to mitigate the effect of the amendments made by the provisions of this Act specified in subsection (4), when taken together, on those for whom such effect is a net increase in income tax payable, and
	(b) the House of Commons shall by resolution have approved such statement.
	(4) The provisions referred to in subsection (3) are
	(a) sections 1, 3(2) and 3(3),
	(b) section 3(7)(a) and Schedule 1 (in so far as they relate to the starting rate), and
	(c) any other provision of this Act the effect of which is to change the bands of income on which income tax is charged.'.
	New clause 6 Harmonisation of income tax and national insurance contributions 
	'(1) If for any tax year
	(a) the personal allowance under section 35 of the ITA 2007 (c. 3) is set at an amount which is not equal to the amount of the primary threshold under section 5 of the Social Security Contributions and Benefits Act 1992 (c. 4), or
	(b) the sum of the personal allowance and the basic rate limit under sections 35 and 10(2) of the ITA 2007 (c. 3) is set at an amount which is not equal to the upper earnings limit under section 5 of the Social Security Contributions and Benefits Act 1992 (c. 4),
	the Treasury shall within one month of the passing of the Act which sets the personal allowance or basic rate limit lay before Parliament a report explaining the matters set out in subsection (2).
	(2) Those matters are
	(a) why the amounts have diverged for the year, and the expected future path of the amounts in relation to each other; and
	(b) the estimated cost to
	(i) employers, and
	(ii) HMRC,
	of operating a system of divergent thresholds and the savings that are expected to result from a convergence of those thresholds.'.
	New clause 10 Personal allowances 
	'(1) The Treasury must by regulations made by statutory instrument vary section 35 of ITA 2007 (personal allowances for those aged under 65) so as to achieve the outcome specified in subsections (2) and (3).
	(2) For the tax year 2008-09 50 per cent. of income in excess of 6,400 (up to a maximum of 600) shall be added to the personal allowance, subject to subsection (3).
	(3) That addition shall be withdrawn at the rate of 10 for every 100 of income in excess of 7,600, so that
	(a) a taxpayer with an income of 7,600 receives an addition to the personal allowance of 120, and
	(b) a taxpayer with an income of 13,600 receives no such addition.
	(4) Regulations under this section may make such transitional or incidental provision as the Treasury thinks fit.
	(5) A statutory instrument containing regulations under this section may not be made unless a draft of the instrument has been laid before and approved by a resolution of the House of Commons.'.
	New clause 13 Independent review of income taxation 
	'(1) The Chancellor of the Exchequer must appoint a person to review the operation of the provisions of the ITA 2007 and sections 1 to 3 (income tax) of this Act.
	(2) That person must, within 12 months of the coming into force of this Act, carry out and report on a review of those provisions and, where he does so, must send a report on the outcome of his review to the Chancellor of the Exchequer as soon as reasonably practicable after completing the review.
	(3) That person must, upon the amendment by future legislation of any provision contained in ITA 2007, carry out and report on a review under this section within 12 months of that amendment coming into force.
	(4) A report received by the Chancellor of the Exchequer under subsection (2) must be laid before the House of Commons.'.
	New clause 20 Personal allowances (No.  2) 
	'(1) The Treasury must by regulations made by statutory instrument vary section 35 of ITA 2007 (personal allowances for those aged under 65) so as to achieve the outcome specified in subsections (2) and (3).
	(2) For the tax year 2008-09 50 per cent. of income in excess of 6,400 (up to a maximum of 600) shall be added to the personal allowance, subject to subsection (3).
	(3) That addition shall be withdrawn at the rate of 10 for every 100 of income in excess of 7,600, so that
	(a) a taxpayer with an income of 7,600 receives an addition to the personal allowance of 600, and
	(b) a taxpayer with an income of 13,600 receives no such addition.
	(4) Regulations under this section may make such transitional or incidental provision as the Treasury thinks fit.
	(5) A statutory instrument containing regulations under this section may not be made unless a draft of the instrument has been laid before and approved by a resolution of the House of Commons.'.
	Amendment No. 102, in clause 1, page 1, line 8, at end add ', unless subsection (3) applies.
	(3) If this subsection applies
	(a) the starting 10%,
	(b) the basic rate is 22%, and
	(c) the higher rate is 40%.
	(4) Subsection (3) applies in the case of any person who has notified the Commissioners for Her Majesty's Revenue and Customs that he wishes his income to be charged at the rates specified in that subsection and not at the rates specified in subsection (2).'.
	Amendment No. 103, in clause 3, page 2, line 18, leave out subsections (2) and (3).
	Amendment No. 104, page 2, line 22, leave out subsection (5).
	Amendment No. 105, page 2, line 26, leave out 'the starting rate and'.
	Amendment No. 6, page 2, line 27, at end insert
	'(8) The Chancellor of the Exchequer shall, within six months of the coming into force of this section, lay before the House of Commons a report containing an assessment of the combined impact of
	(a) the increase in personal allowances, and
	(b) the abolition of the starting rate of income tax,
	on individuals with a gross income under 13,000 per annum.'.
	Amendment No. 106, in schedule 1, page 101, line 15, after '(2)', insert
	'Unless section 1(3) of FA 2008 applies,'.
	Amendment No. 107, page 101, line 17, at end insert
	'(3A) After subsection (2) insert
	(2A) If section 1(3) of FA 2008 applies, income tax is charged
	(a) at the starting rate on an individual's income up to the starting rate limit, and
	(b) at the basic rate on an individual's income above the starting rate and up to the basic rate limit.'.
	Government amendment No. 5
	Amendment No. 108, page 101, line 24, at end insert
	'(8) The starting rate limit is 2,150.'.
	Amendment No. 109, page 101, line 25, leave out sub-paragraph (6).

Jane Kennedy: Government new clauses 11 and 12 and Government amendment No. 5 put into effect the Chancellor's statement to the House on 13 May. Raising the personal allowance by 600 to 6,035 is worth 120 for a basic rate taxpayer, equivalent to the average household loss from the Budget 2007 reforms. Around 2 million basic rate taxpayers will benefit from the change. The number of households that lose from the Budget 2007 reforms will be reduced from 5.3 million to 1.1 million, and the amounts for those who still see a loss will be at least halved.
	The Treasury Select Committee published its report on Saturday 28 June. We will respond in detail to that report in due course, but let me just quote from the Committee's press release. The Committee welcomed the compensation for
	those who have lost out through the abolition of the starting rate of income tax through raising the personal allowance for basic rate taxpayers, but concludes that there remains a pressing need for the Government to seriously examine ways in which the 1.1 million households who will continue to lose can be fully compensated.
	As I have the opportunity of speaking twice on such occasions, it has been my practice in Committee to move the Government's amendment or new clause briefly and then listen to the detail of the debate, so that I may address directly the points that colleagues raise.

Lembit �pik: Before the Minister concludes for now, may I ask her the question that my constituents in Montgomeryshire have asked me? Why have the Government abolished a tax arrangement that they introduced? Why was it their judgment to introduce it in the first place, only to abolish it now? I do not understand what changed.

Jane Kennedy: There are very sound reasons why the 10p rate was removed in the Budget 2007. Those have been debated on many occasions in the House. I will come to many of the benefits that flow from those changes later in this debate.

Frank Field: I am sure that those of us on the Government Benches much appreciate the approach that my right hon. Friend will adopt of listening to the debate and then replying. I hope that when she replies, she will be able to say something about how she thinks the Government will probably respond to the Treasury Committee's recommendation on how that smaller group who benefit only partially from new clause 11many have benefited, most totally, but some only partiallymay be fully compensated before the year is out.

Jane Kennedy: I have listened very carefully and had conversations with my right hon. Friend and many others who have spoken to me about this issue, and I am sure that they will wish to participate in today's debate. I want to reassure him that we will return to this issue in the pre-Budget report, as the Chancellor has said, not only in front of the Select Committee but elsewhere. He will bring forward concrete proposals, and they will be implementable as soon as possible. I want to give my right hon. Friend that reassurance right up front at the beginning of this debate.

Rob Marris: Will my right hon. Friend say a little more about this while she is setting the scene? She quoted from the Treasury Select Committee's press release and mentioned a figure of 1.1 million households. I believe that that represents 20 per cent. of the figure of 5.3 million households that was put forward last year by the Institute for Fiscal Studies. Treasury officials appearing before the Treasury Select Committee last year said that they broadly accepted that figure. Will the Minister tell the House whether the Treasury has looked again at that figure? Many hon. Members, especially on this side of the House, are rather suspicious because, while we wish to see no losers at all, we think that the figure of 1.1 million households is awfully high.

Jane Kennedy: I stand by the figures that we have discussed. I have no reason to believe that the 1.1 million figure is not accurate. It is certainly the figure that we continue to work to.

Julia Goldsworthy: The Minister has just said that the Chancellor will return to this issue in the pre-Budget report. Will he also take into consideration the other issues, besides the changes to the 10p rate, that are affecting the losers? I was contacted today by a constituent who feels that she has been hit by a double whammy, because she will also lose out as a result of the switch from housing benefit to housing allowance. Can the Minister give me an assurance that all these cross-cutting issues will be looked into when the Chancellor returns to this matter in the pre-Budget report?

Jane Kennedy: At the beginning of the debate, I said that my making a short introduction would enable Back-Bench colleagues to make a longer contribution, to which I could respond in more detail at the end of the debate. I would hope to give the hon. Lady the reassurances that she is asking for, and I can assure the House that this work is ongoing. It is not a matter that Ministers have set aside. It is a serious matter, and I acknowledge the way in which amendments on the issuemany of which will be debated todayhave been put forward.

John Redwood: It might speed the debate up if the Minister could clarify this point. Is she now saying that the Chancellor will come forward with proposals in due course to ensure that there will be no losers, or is she saying that a lesser number of losers than 1.1 million would be acceptable?

Jane Kennedy: What I have said is that we intend to consider this matter very seriously. We have made it very clear that we will return to the issue in the pre-Budget report, which is the proper time for such a matter to be discussed in further detail in the House. That is our intention. At this point, I would like to hear the detail of the debate, and to respond in detail in due course.

Philip Hammond: I have been in this House for 11 years, but I do not think that I have ever seen a Minister so anxious to sit down and hear what her colleagues had to say. She seems remarkably reluctant to pin her colours to the mast at this stage. The hon. Member for Wolverhampton, South-West (Rob Marris) suggested that the Minister was in listening mode, and I am delighted to hear that. Let us see whether we can make some progress on that basis.
	The first group of amendments that we are debating today addresses what has become the central issue in the fiasco of the 2008 Budget and Finance Bill, as it has unravelled on what I think it is fair to call a scale that is unprecedented in modern parliamentary history. No one inside or outside the Chamber really believes that the changes introduced by the Government in new clauses 11 and 12 are some kind of well thought through, counter-cyclical response to the economic slow-down. They were announced on 13 May as an attemptto use the language of the Treasury Committeeto pull a rabbit out of the hat ahead of the Crewe and Nantwich by-election and to undo the damage that the Prime Minister did in the 2007 Budget by putting short-term political calculation ahead of long-term political principle. Behind the spin, this is simply the final actat least, it is for this year's performanceof what, depending on one's point of view, is either a tragedy or a farce of epic proportions, which has been delivered at epic cost, both financial and political.
	The Financial Secretary did not provide any context, so let me remind the House of the history of the 10p tax rate, its birth and its death, on which these new clauses are intended to buy the silence of Labour Back Benchers. The 10p tax band first reared its head in the 1997 Labour party manifesto as a long-term objective towards lowering the starting rate of income tax to 10p in the pound. When it was introduced in 1999, the then Chancellor, our current Prime Minister, described it as something that will
	make work pay and help people, especially those who are low-paid, to keep more of the money that they earn
	As I have reminded the House before, the Prime Minister's final flourish on delivering that 1997 manifesto pledge for the 1999 Budget was this:
	When we make promises, we keep them.
	That is grand and principled stuff, but by May this year, the current Chancellor was not describing the 10p tax rate as some long-term objective and deeply held principle of taxation, or as a manifesto commitment the delivering of which was a moral obligation for the Labour party. No, by spring this year, the promise to be kept had been downgraded to something
	introduced in 1999 as a transitional measure.
	So it is not so much a case of making promises and keeping them; it is more a case of ducking and weaving, twisting and spinning rather than of admitting that the promises were being broken.

Andrew Love: The hon. Gentleman is speaking very warmly about the 10p tax rate, so will his party give a commitment to reintroduce the 10p rate, should it ever become the Government?

Philip Hammond: I note the tone in the hon. Gentleman's final phrase, but I do not know where he has been over the past couple of months. He knows very well that the answer to that question is no. We have said that we accept the abolition of the 10p rate and the simplification of the tax system. That is supportable, but the Government have to ensure that it is delivered in a way that is not carried on the backs of the poorest taxpayers in our society. I would have thought that the hon. Gentleman would have been keen to promote that principle. What I am speaking warmly of is the principle that when parties make manifesto commitmentswe could all think of a few of themit is generally good for the health of the body politic if they deliver on them.
	To be fair to the Prime MinisterI like to be fair to himhe could scarcely have paid a higher political price than he has for his cynical calculation over the income tax changes, creating 5.3 million losers among some of the lowest paid in our society. The Financial Secretary told us that there were very sound reasons for abolishing the 10p rate. The very sound reason that I can determine is that it was in order to fund the 2p cut in the basic rate of income tax that was announced with a flourish at the end of the 2007 Budget speecha speech that was constructed and intended to be the launch pad for the then Chancellor's bid for the Labour leadership and thus the office of Prime Minister. He thought that, by giving a demonstration of Blair-like ability to appeal to middle English voters, he would appeal to his party as an election winner in the mode of his predecessor. The price that was to be paid by the poorest in our society in the form of a deferred increase was buried in the small print. The plan was to hold the election in the autumn and worry about the mess that fell into place the following spring after the election was safely out of the way. The rest, as they say, is history.
	The fly in the ointment, of course, was the Prime Minister's now notorious inability to make a decision, and the obviously completely irrelevant drop in his opinion poll rating at the beginning of last Octoberhe would give his eye teeth for such a rating now. There we have it: a bungled and deceitful plan foiled by its author's weakness and indecision.
	There is a case for fiscal looseningtax reductionswhen the economy is slowing dramatically. A prudent Government who had put something by during the good years would have made that case in the Budget speech in March this year. But our Government did not put anything by. They did not fix the roof while the sun was shining. Unlike most of our competitors, who put their public finances in ordersome of them paid off the entirety of their net public debtthe UK enters the downturn ill-prepared as a result of what the OECD called excessively loose fiscal policy during the good years, and even more exposed to financial instability than the US, according to Alan Greenspan.
	Therefore, the Chancellor did not announce a fiscal giveaway in the Budget in March because he had nothing left to give away. In fact, he said in his Budget speech that the best way to help families is not through a further rise in personal tax allowances. Of course, that was before; now he claims that he meant to say that the best way to help families is through a further rise in personal tax allowances. As the temperature started to increase on the Labour Back Benches, the Chancellor pleaded that he had no money, and said that he could not rewrite the Budget. As the temperature reached boiling point when the Bill was before a Committee of the whole House, however, his resolve snapped once again, and a perfect 180 U-turn was executed by the Treasury's now rather accomplished U-turns teamveterans of the non-dom tax, the entrepreneurs' relief, the foreign profits tax, and now the banking reforms. The Budget that could not be reopened was reopened; the money that the Chancellor did not have was found; and the barbarians at the gateI am sorry to refer to the right hon. Member for Birkenhead (Mr. Field) in those termswere bought off. Or were they?
	The emergency Budget on 13 May plucked another 2.7 billion of borrowing out of the air, and at a stroke reduced the number of losers from the 10p tax debacle from 5.3 million families to just 1.1 million families. But two questions remain to be answered. The first is the one that the Financial Secretary identified from the Treasury Committee's report: what about the other 1.1 million families? On the day of the great climbdown, when the right hon. Member for Birkenhead went to see the Prime Minister, the words being used were compensation in full backdated for everyone. To date, we have still not heard how the remaining 1.1 million losers will be compensated.
	Secondly, we have not heard from the Government what will happen next year. Will the personal allowances stay at the level of new clause 11, and be indexed in accordance with existing law? Will the additional winter fuel allowance be repeated in future years? Speculation is rife. The Institute for Fiscal Studies calculates that, in the absence of action to extend the effect of new clause 11 into 2009-10 and 2010-11, by 2010which, as hon. Members will have noted, could be a general election yearsome 18 million families would be worse off than they are in 2008-09.
	However, 13 million families who were not losers from the Budget 2007 reforms have none the less gained from the increases in the personal allowance. Do the Government plan to claw back from them in future years, perhaps by adopting proposals along the lines of those of the hon. Member for North-West Leicestershire (David Taylor) in new clause 10, or will they just continue to borrow an additional 2.7 billion a year to fund the tax giveaway and the 600 million-odd required to extend the additional winter fuel payments?

John Redwood: I can see the temptation to make a party point or two in these circumstances, but is there not one view that unites Members in all parts of the House? We are genuinely puzzled over why some of those on the lowest incomes should face this tax increase, and we cannot believe that the Government really intended it. Is it not rather a pity that the Financial Secretary did not repeat the assurance that all 1.1 million people would be guaranteed not to be worse off by whatever means the Government come up with in the autumn? Is that not a concern that we can all share?

Philip Hammond: That is true. There was speculation at the beginning of this fiasco as to whether it was a simple errora failure to understand the distributional consequences of the measurebut I well remember saying in the Committee of the whole House that, while I deferred to no one in my enthusiasm for criticising the Prime Minister, I had never suggested that he was either stupid or innumerate. Subsequently, in evidence to the Treasury Committee, officials have made very clear that a full distributional analysis was undertaken, that the measures announced in the 2007 Budget were announcedas the phrase goeswith eyes wide open, and that the Prime Minister knew exactly what he was doing. What his game plan was at the time, when he was faced with the Labour party leadership and a possible election in the autumn, is anyone's guess, as I have said. Members will form their own views on what his ultimate intentions were.

Frank Field: The hon. Gentleman is in typically generous mood this afternoon as he assesses the Government's dilemma. May I ask what advice he might give them? The right hon. Member for Wokingham (Mr. Redwood) has suggested that the House is united in the view that the poorest paid should not lose out as a result of the Budget changes. Does the hon. Gentleman believe that next year the Government should increase personal allowances above the level of indexation and pay for the increase by clawing it back, perhaps through national insurance increases for those of us who benefited from the 2p cut in the standard rate?

Philip Hammond: Various suggestions are being bandied about. I do not consider it my responsibility to be prescriptive about the solution that the Government should adopt. They dug the hole, and they can jolly well get themselves out of it. We have a responsibility to ensure that the Government stick to the promise that they made to the right hon. Gentleman in the Committee of the whole House and present proposals at the time of the pre-Budget reportas the Financial Secretary to the Treasury has already suggested that they willto deal with the issue in terms that fulfil that promise. That is the obligation that we must enforce, and that, I think, is the mood throughout the House.

Frank Field: Let us consider the worst possible scenario. It is an unlikely prospect, but let us suppose that the Government stumbled again, and in the November statement did not come up with a package that met the requirements of Labour Members. The hon. Gentleman is presumably aware that if enough of us tabled a motion, the Opposition would have time to debate it and to censure the Government. While I do not propose that he should help the Government to dig themselves out of a hole, he might suggest that he would be ready to ensure that they do not get out of the hole without fulfilling the commitment made to the very poorest workers.

Philip Hammond: The idea of a censure motion is interesting, and I am grateful to the right hon. Gentleman for advancing it. I do not know whether he has had time to read new clause 4 in detail, but it presents our solution to the immediate challenge to Parliament. It lays down a marker that holds the Financial Secretary to her commitment to revisit the matter in the pre-Budget report, and requires the Chancellor to return at the time of the report with a comprehensive solution. He has plenty of time: he has the rest of the summer in which to work it out with his armies of civil servants. The important proposal in new clause 4 is for the House ultimately to decide whether his solution constitutes a satisfactory and acceptable delivery on the promise made to the right hon. Member for Birkenhead a couple of months ago.

Andrew Love: Will the hon. Gentleman give way?

Philip Hammond: I will give way once more, but then I must make some progress.

Andrew Love: I thank the hon. Gentleman for giving way. According to the Treasury Committee report, the Chancellor will be faced with two choices: either to focus directly on the 1.1 million families at relatively low cost but with a huge increase in the complexity of the tax system, or to take a step that is much less complex but which will cost the public purse a great deal more. Which of those two options does the hon. Gentleman think the Chancellor should choose?

Philip Hammond: The first part of the hon. Gentleman's question was a useful contribution, but the latter part was not, because this is not my holeI did not dig itand, as I will now outline, there are many ways in which the problem could be tackled, including through the suggestions of the hon. Members for Birmingham, Selly Oak (Lynne Jones) and for North-West Leicestershire.
	The Institute for Fiscal Studies suggests that some of the remaining losers could be compensated by raising the personal allowance still further or by extending working tax credits to those working 16 hours a week at the age of 21 and over. If the Government want to claw back some of the gain they have delivered this year through new clause 11, they could use a variant on the taper, which the hon. Member for North-West Leicestershire has proposed, although, as the hon. Member for Edmonton (Mr. Love) rightly says, that would be at the cost of making the tax system more complex and expensive to operate, when the original intention was to make it simpler.
	As we know, in Her Majesty's Revenue and Customs, with complexity goes a tendency to make errors, which is bad for the integrity of the tax system as a whole. The IFS says that if the Government chose to freeze the personal allowances at the level introduced by new clause 11 instead of indexing them in accordance with the law under the Income and Corporation Taxes Act 1988, that would be equivalent to a real cut of around 200 and would thus claw back about a third of the gain received by each basic rate taxpayer, leaving about 8.3 million families worse off next year than they are this year.
	There are many different solutions, but we do not have the resources that the Treasury has and I do not pretend to have answers to the dilemma in which the Government find themselves. However, what unites Members in all parts of the House is a belief that something must be done, both this year for the 1.1 million families who are still worse off, and in future years for those who have been compensated by the increase in personal allowance but do not yet know if they will get the increase next year along with the additional winter fuel payments. We are united on that, because it is morally unacceptable to fund a tax cut on the backs of the poorest, and because the Government promised that they would do such a thingand rebuilding political trust in this country, which is a priority for my party, requires that Governments get into the habit of keeping the promises they make.
	A variety of mechanisms have been suggested, and I commend the Labour Back Benchers who have sought to engage in this debate and remind the Prime Minister of his commitment. Precisely because there are many ways in which the Government can deliver on their promise, I and some of my party colleagues have tabled new clause 4, which I call the insurance policy clause. It is a variant on an amendment that we tabled in the Committee of the whole House and it should appeal alike to those who expect the best from the Chancellor and those who fear the worst, because it introduces a sunset provision for the changes to the starting rate unless the Chancellor has by the end of this year laid before the House of Commons a report setting out what he has done, and what he intends to do, to compensate those who are still losers when all the measures are taken together, following the introduction of the measures that the Government are introducing today.
	Our proposal is deliberately not prescriptive. There is no requirement that the Chancellor must take one approach or another. There is no attempt to force him to give his answer today; we accept that he will do so at the time of the pre-Budget report. It will be for the House then to decide whether it is satisfied with the actions he has taken, or proposes to take, as set out in the report that he will be required to make. Given the parliamentary arithmeticunless the rate of by-elections increases a little between now and the end of the yearthat will mean in practice that he must satisfy the 50 or 60 Labour Back Benchers who have been most concerned about, and active on, this issue that he has in this autumn's pre-Budget report delivered on the commitment to compensate all the losers.
	All those who believe that a solution for the future has to be found and announced in the pre-Budget report, as well as those who doubt the Chancellor's commitment or ability to deliver and those who do not, should be able to coalesce around this insurance policy clause. If the Chancellor can satisfy the House by the end of the year that he has delivered, in his pre-Budget report, a lasting and satisfactory solution that adequately compensates those who have lost out, he will have no difficulty in obtaining his resolution and thus overriding the sunset provision. But if he should be tempted to turn his back on this issue, or if the Prime Minister should be tempted to renege on his earlier commitments, the sunset clause will provide a mechanism for a parliamentary check to keep them both honest.
	I sincerely hope that Members on both sides of the House will support new clause 4 to strengthen the House's power to determine the outcome of this mess in due course. It is a mess in more ways than one. One of the benefits of the 2007 proposals that was trumpeted by the Chancellor at the time, and spoken of in warm terms by the Financial Secretary in consideration of the National Insurance Contributions Bill, was the alignment of national insurance and tax thresholds. We were told that that would bring greater simplicity to the tax system and reduce cost burdens for businesses and taxpayers alike. It was a strategic step in what the Financial Secretary called the significant simplification of the tax and NI system. Indeed, she told the House during consideration of the Bill that the alignment of NICS and higher rate income tax was the main purpose of the Bill. I am sorry to have to tell the House that, if that was the main purpose, the House's time has been wasted. Thanks to new clause 12, as the Government claw back the benefit of the increased personal tax allowances from higher rate taxpayers, the higher threshold for national insurance contributions will remain, so people will still pay more in national insurance, but the threshold for the higher rate of tax is dropped, reintroducing the complexitythe removal of which was claimed to be one of the principal benefits of the 2007 package.
	New clause 6 seeks to shine the spotlight on the misalignment of tax and national insurance thresholds. It would require the Treasury, in any year when the thresholds are different, to report to Parliament explaining why, setting out its plans for convergence in the future, and setting out the costs to employers and the HMRC of a divergent system and the savings that would be made by convergence. The Government have made the case that a simpler tax system is a better one. That is ironic, in view of the fact that this is the same Government who have given us the longest tax code in the world and made our tax system one of the most complicated, but on this issue they were right. If it were not so debilitating to Britain's reputation, it would be laughable that just about the only effective measure that the Government have introduced to simplify the tax system has unravelled under the weight of their incompetence.
	Having flagged up the significance of convergence and its economic benefits, the Government should accept new clause 6, with its underlying assumption that a system of converged thresholds remains the objective, and they should be prepared to explain to Parliament, on each occasion that they do not achieve that objective, why they have not done so and what steps they will take to move to convergence, as well as revealing the costs of divergence. I would be interested to hear from the Financial Secretary whether the Government are still committed to the objective of aligned thresholds, because her language of late has suggested a desire to move the thresholds closer together, rather than the original and meaningful purpose of aligning them completely.

Mark Field: Does my hon. Friend agree that one of the difficulties for the Government even of the converged thresholds initiative, which we entirely agreed with, was that it was not going to be revenue-neutral at that stage? Perhaps he will explore the subject with the Minister to try to ensure that so far as hard-pressed middle-earning taxpayers will pay for the result of that convergence, they will at least have some of the disadvantage brought back because the confusion to which he has alluded will be sorted out.

Philip Hammond: I know that my hon. Friend served with distinction on the Committee that considered the National Insurance Contributions Bill. He is well versed in these issues. The Financial Secretary will have heard his comments and, I hope, will feel able to respond to them in her substantive speech.
	Let me move on to new clause 1A. There is a theme among these amendments and new clauses of seeking to strengthen Parliament's control over the process. New clause 1A seeks to strengthen Parliament's knowledge and oversight of the Treasury's projections in a situation where the state of the public finances is deteriorating rapidly. Traditionally, the Chancellor gives to Parliament statements of the Treasury's forecast of economic growth and public borrowing twice a yearat the pre-Budget report in November and at the Budget in March. In normal times, that is just about sufficient. However, when the public finances are deteriorating rapidly and economic growth projections are being downgraded regularly, that is simply not good enough. Parliament is being kept in the dark.
	At the time of the pre-Budget report last year, the Chancellor said that the Government would borrow 36 billion and that growth this year would be 2 to 2.5 per cent. In the Budget, just four months later, he said that he would borrow 43 billion7 billion moreand downgraded his growth forecast to 1.75 to 2.25 per cent. Since then, the continuing effects of the credit crunch and the oil price shock, all of which Britain is ill-prepared to absorb, have led every commentator, including the Bank of England, sharply to downgrade their expectations of economic growth. With a downgrading of the growth forecast invariably comes a downgrading of tax receipts and, all other things being equal, an increase in the expected level of borrowing.
	I concede that the territory is complicated. The Government benefit from higher tax receipts from North sea oil and gasI am sure that we will hear something about that as Report stage unfolds. So long as unemployment does not begin to rise rapidly, the automatic stabiliser of increased welfare spending will not necessarily manifest itself. The Government have now stated that they will borrow an extra 2.7 billion for the 10p compensation package. The picture is complicated and it is simply not good enough, when the Government are led by a Prime Minister who claims to want to reinforce the accountability of the Executive to Parliament and to build a new relationship between citizen and Government, for them to keep both Parliament and the population in the dark.
	All leading City commentators and the Bank of England have downgraded their economic forecasts. We know that the Treasury will have revised its forecast, but that revision remains locked away in the Chancellor's safe. Parliament is left in ignorance, as are the people. They are left ignorant of the scale of the slow-down in the economy that is expected by the Government and of the size of the increase in public borrowing that that will entail.
	New clause 1A enshrines the principle that when income tax changes are made in-yearan unusual situation that implies very unusual circumstancesthe Government should publish an updated report on economic growth and public borrowing so that Parliament, as well as the nation, has an authoritative view of the bigger picture when approving the changes that it is asked to make to income tax. The established principle is that tax changes are announced only in Budgets and pre-Budget reports and that growth and borrowing are forecast at the same time. If tax changes are made at other times, the updated forecasts should be set out alongside them for the sake of transparency and completeness.
	I shall conclude by referring briefly to new clause 10 and amendments Nos. 102 to 109, tabled by the hon. Members for North-West Leicestershire and for Birmingham, Selly Oak. As I have said before, we believe that it is the Government's responsibility to deliver on their promises to compensate all those who have lost out from the abolition of the 10p rate of tax.
	As I said earlier, the Prime Minister, when he introduced the 10p band, claimed:
	When we make promises, we keep them.
	Last May, he faced a Back-Bench rebellion and made another promisehe promised the right hon. Member for Birkenhead that he would compensate all the losers in full. So it is disconcerting that this morning's edition of  The Sun should report that he had
	slammed the door on help for 1.1 million low-paid workers hit by the Government's 10p tax fiasco.
	The headline says that there will be Not a Penny More aid the for 10p tax rebels, so the hon. Members for North-West Leicestershire and for Birmingham, Selly Oak deserve praise for maintaining the pressure. There are advantages and disadvantages to the solutions that each proposes, but they are a contribution to the debatein stark contrast to the reported slamming of the door by the Prime Minister.
	Our view is that this is the Government's problem, and that it was created by the Prime Minister's machinations last year. It is for them to clean up their own mess, by coming forward with detailed proposals to help the remaining 1.1 million losers and explaining how they will continue support into the futurebut compensate the Government must if they are to deliver on the promise that they made. They must make those proposals known to Parliament, and not only in private to their Back Benchers. That is why we believe that new clause 4 is the best way forward: it is a sunset provision that gives the Government the latitude to explore an optimum solution to delivering compensation, but one that will give Parliament the final say as to whether the proposals are adequate.
	I sincerely hope that hon. Members of all parties who are determined to ensure that the Government deliver on the promise given to the right hon. Member for Birkenhead will support new clause 4 in the Lobby tonight. May I give you notice, Mr. Speaker, that with your leave I shall be seeking a separate Division on new clause 4?

David Taylor: Thank you, Mr. Speaker, for calling me to speak and for selecting new clauses 10 and 20 for debate this evening. I am grateful to my 20 colleagues who are the new clauses' co-signatories. Many others who have not signed have said that they will support the new clauses in the Lobby at the end of this part of the debate if I exercise my right to move them formally, should that be appropriate.
	I shall speak mainly to new clause 20, which supersedes and replaces new clause 10, which has a slight textual error. New clause 20(3)(a) specifies an addition to the personal allowance of 600, rather than the 120 that was incorrectly printed in new clause 10. The new clauses are otherwise identical, but new clause 20 is the framework for my address to the House this evening.
	The level of taxation is a crucial and sensitive performance indicator for any Government. There are many myths about the differences between parties, and they are persistent. At least one of those myths was laid to rest in 1997, when the incoming Labour Government famously committed toand delivered onpublic expenditure levels that were unchanged from those of the previous Conservative Government. It is perhaps a measure of the Opposition's esteem for this Government that they have committedif they were to return to power in, say, 2015, or some later dateto stick to our public expenditure levels for a two-year period. That is an echo of what we did 11 years ago, and I welcome it.
	However, some myths persist, and one was exposed very effectively by a well-known commentator on these matters, Andrew Dilnot, at the time of most recent conferences of the three main parties. He said that the electorate would see the customary but bizarre spectacle of the two partiesthe main Opposition party and the Labour partyemphasising the differences between us on public expenditure and taxation, even though they were quite minor. In an important section of his article, he went on to state:
	Even when you take borrowing into account by looking at total spending rather than just taxation, during every year that Mrs. Thatcher was in power, except the last two when the economy was in an unsustainable boom, her government spent more of national income than Mr. Blair's did.
	The crucial sentence followed, and I hope that Members will hang on to it and perhaps wake up at 3 o'clock tomorrow morning and say, Is that really right? It reads:
	Her Government averaged public spending of 45.4 per cent. of national income
	between May 1979 and when she fell, in Paris or elsewhere, in November 1990. The Government of Mr. Blair, our own former Prime Minister, in the 10-year period between May 1997 and when he stepped down last June, averaged 39.7 per cent., which is almost 6 per cent. less public expenditure as a proportion of gross domestic product. That should lay to rest the mythit is patently falsethat modern Labour Governments are reckless high spenders and excessive taxers. That is a myth and the figures give the lie to it.

Philip Hammond: Given what the hon. Gentleman has just told us, why does he think that the then Chancellor thought it necessary to introduce the fiscal rules that he introduced, and why do the Government seem to set such store by them?

David Taylor: The then Chancellor was a very wise and creative politician who had sound reasons for taking his actions. They were proved to be wise, at least for quite a lengthy period.
	Although there is a bit of a myth about Labour having high-taxing Governments and the Conservatives being abstemious in that regard, the level of taxation, especially for the low-paid, is hugely important to Labour Members. That is why the abolition of the 10p tax rate in the 2007 Budget had such resonance on our Benches. It was because of its impact, which I shall discuss in a moment.
	The most effective Labour Prime Minister of the 20th century was indisputably Harold Wilson, who famously saidI think that it was at the October 1962 Labour party conference:
	This party is a moral crusade or it is nothing.
	The last Prime Minister quoted those words on the death of Harold Wilson. Amen to them, because many Labour Members felt moved to join our party in a crusade to combat poverty, tackle inequality and root out injustice. We can be proud of a legion of successes and advances, but when it became clear that the unintended consequences of the 2007 Budget would adversely affect 5.3 million people on low pay, while leaving 21 million people better or no worse off, we were alarmed that poverty, inequality and injustice were being worsened by the decisions that had been taken. That was a triple whammy, and we urged the Chancellor of the Exchequerby then it was the new Chancellorto eliminate it. We did not want those three problems of poverty, inequality and injustice to become entrenched, perpetuated or institutionalised to any extent.
	That was how the debate started about how to get out of the situation. It was not a problem such as would feature in the children's comics, where with one bound we could be free. An awful lot of time, trouble and evaluation of options was involved. My early contribution to try to assist the Government drew on my background as a tax accountant. I designed and promoted a fairly simple framework based on an additional tax allowance of 1,200, but with tapering. It would have compensated those who had lost out, and only them, with the amount that they had lost through the abolition of the 10p rate, and only that amount. The people who were affected at that stage, before the 13 May announcement, were typically those on an income starting at about 5,200. The peak loss occurred among people with an income of about 7,600, for whom the loss was about 240, and it tapered off because of all the tuppences that they were receiving from a lower rate at a capped level of about 19,600. So there was a triangle with, at its centre, 7,600. Those people who earned about that amount were, before the 13 May statement, losing about 240.

David Hamilton: I am not one of the 21 signatories to my hon. Friend's new clause, but I will be supporting him in the Lobby tonight. Can he expose the myth that we have taken money from the poor to give to the poorer? It has been suggested that the people who will pay are those on 13,000 to 18,000.

David Taylor: I can. There are always myths in the area of taxation and accountants grow fat exposing them or sometimes exploiting them. The fact is that the official reason for the abolition of the 10p rate was at least in part that it would fund the reduction of the standard rate from 22p to 20p. The actual losses of 5.3 million people, as I shall go on to explain in a moment, aggregated to about 700 million in that regard. In no way did the savings generated for the Government by the abolition of the 10p rate for the lower band of income earners fund the tuppence reduction for salaries that went off into infinity from about 19,600. I think that I intervened on the hon. Member for Runnymede and Weybridge (Mr. Hammond) in the Budget debate to make that point. They made a small contribution to that reduction, but it would be unfair to say that it was a case of the poor subsidising the rich.
	I therefore devised a fairly simple framework to compensate people with the exact amount that they had lost. They typically had income taxed at only 10 per cent. under the old system, between 5,200 and 7,600. The maximum loss was 240 per annum. I incorporated my framework into early-day motion 1477. In a rare success, I got a letter published in  The Guardian on 7 May, six days before the Chancellor announced the details of his scheme. One part of it reads:
	An HMRC software developer can code it up rapidly. No changes needed to WFA, tax credits or minimum wage.
	They were options at the time, and I am pleased that they were abandoned because they were not a great idea. The letter continued:
	And the tax rate stays at 20%. It has the benefit of (relative) simplicity, it is retrospective
	that was always a requirement of the campaign for compensation
	and it will fully and accurately reimburse all those (and only those) who otherwise lose up to 240 per year. Total cost around 650m - much less than the political damage that we are incurring.
	Come on, Gordon, announce something like the above as the chosen scheme so that our party can start to put this damaging distraction behind us.
	It is disappointing that two months on we still have this distraction, and I hope that this debate will at last lay this one to rest.
	The scheme that I suggested was similar to that which exists for pensioners. They have a higher tax allowance that is tapered off and disappears. It starts to taper off at about 21,000 and disappears totally by about twice that sum. I urged my right hon. Friend the Chancellor not to pursue the winter fuel allowance, national minimum wage and tax credit route for the under-65s. It was an imprecise, uncertain and lengthy way of doing it. This is a tax problem. It was a problem injected into the taxation system and it needed a solution within the tax system. It did not need solutions that were incomplete, delayed or inaccurate.
	I was pleased to be present in the Chamber on 13 May when the Chancellor announced an extra tax allowance, albeit not my 1,200, which would have been the basis for reimbursement of full losses. The Chancellor decided to reimburse average losses, so obviously the tax allowance he inserted was not 1,200 but 600. That reimbursed the average loss of 120, but it was not tapered and allowed for the fact that it was not applied to those who pay income tax at the 40 per cent. rateas all of us in the Chamber do. New clauses 11 and 12 are designed to implement the Chancellor's statement of 13 May.
	The package was broadly welcomed on the Labour Benches at the time, but the difficulty was that it gave 120600 extra allowance at 20 per cent.to 22 million people, of whom a good 14 million or more were not adversely affected by the abolition of the 10p rate. They had not received a hit of any kind, but 5.3 millionthat famous figurehad been affected.

Philip Hammond: The hon. Gentleman is being very coherent and I understand his argument, but is he proposing that 18 million people should have clawed back from them some of the benefit of the personal allowance awarded to them under new clause 11? Given the squeeze on incomes and the soaring prices that families face, does he think that that is an appropriate measure at this point in time?

David Taylor: I was just coming to that point, so I shall make it now. New clause 20, to which I am speaking, sits on top of the Chancellor's existing arrangements. I did not want to interfere with the thrust of those arrangements, because 14 million or more of the 22 million people in question will have already factored into their personal budgets the fact that they will receive 120 during this tax year60 in September and 10 in each of the following six months. As the Chancellor said on 13 May, that was designed in part to compensate people for higher fuel bills and so on. My new clause 20 sits on top of those provisions, and I shall vote for new clauses 11 and 12 before turning to my proposal.

John Redwood: I am grateful to the hon. Gentleman, who is genuinely trying to find a solution to the problem. Does he have a figure for the additional costs that his idea would impose on the Treasury?

David Taylor: I shall be pleased to answer that question, and will do so almost immediately.
	The abolition of the 10 per cent. rate adversely affected 5.3 million people, and the Chancellor's statement on 13 May more than fully compensated 4.2 million of themin fact some of them had not quite suffered a hit of 120but 1.1 million people remained, and my new clause 20 is designed to compensate that group. What will it cost? It is a matter of relatively straightforward and simple arithmetic. The maximum uncompensated loss at present, which went from 0 to 240 to 0from 7,200 and so onhas been reduced by 120, so the uncompensated loss runs from 0 to 120 to 0 again. The average uncompensated loss, which my new clause will address, is around the 60 mark as far as we can tell: thus, 1.1 million people at 60 is 66 million. That is not an enormous sum; it is the kind of amount that the Chancellor might find down the back of the metaphorical settee when announcing his Budget. It really is a trivial sum. It is about 100th of 1 per cent. of his total tax take, not a major hit on the level of taxation. At only 66 million it is very good value, and I am sure that the Chancellor and his representative on the Treasury Bench must be tempted to snatch my hand off at this point.
	The Treasury Committee also had its doubts. I have reflected on its excellent report, and I am pleased to see that its Chairman, my right hon. Friend the Member for West Dunbartonshire (John McFall), is in the Chamber. There is a lot of good reading in the report, even for the 640 non-accountants in Parliament. We do not necessarily find out who the culprit is at the end, and there is not much love interest, but by and large it is an excellent report that people can read in the recess, which starts three weeks today. I should like to mention two of its conclusions. The first is conclusion 20 on page 111, which states:
	There were consequences from the abolition of the starting rate of income tax. The Government has attempted to tackle this problem through the 13 May announcement. However, this has still left 1.1 million households as losers. There is a pressing need for the Government seriously to examine ways in which the remaining losers can be compensated.
	That is precisely and entirely the object of new clause 20, to which I am speaking. The report says:
	The Government must set out proposals to achieve this by the time of the 2008 Pre-Budget Report,
	which will be in the autumn.
	The other part of the report that I wish to quote mentions the 2.7 billion cost. A lot of it was dead weight, although the dead weight was dressed up as an attempt to compensate tens of millions of families for higher fuel bills. That is fine; I support that, and that is why I shall vote for new clauses 11 and 12. The report says:
	Even though the 2.7 billion was not substantially well-targeted, the raising of personal allowances announced on 13 May was a welcome step towards creating a simpler tax system.
	The phrase, not substantially well-targeted, was rather kind. I think that there may have been heated debates about that in the Committee. I would love to get on to the Treasury Committee; that is a bid for membership, although the Environment, Food and Rural Affairs Committee, which I have served for seven years, is a fine Committee. I guess that there were heated debates in which a rather stronger phrase than not substantially well-targeted was used. The phrase is much too kind, because the approach that the 13 May statement took towards dealing with the uncompensated 1.1 million people was like using a blunderbuss at Bisley, as I heard someone on the radio say this morning. I agree with that statement, not least because I made it myself.
	The 2.7 billion cost can be broken down into 2 billion for the 16 million or so non-losers and the 4.2 million people who were fully, or even more than fully, compensated; there is also the issue of partial compensation for 1.1 million people, which I am trying to address now. There was always a trade-off between targeting and complexity; we know that. Such trade-offs are endemic in the taxation and welfare systems. We have to deal with that in whatever way we can. The Chancellor faced a dichotomya clear choice. He could go for a simple system, perhaps with a simple flat-rate allowance, but that would be expensive because of the dead weight and the lack of tapering. Otherwise, he could go for a slightly more complicated system that was cheap, focused and targeted. I think that that is a fair description of new clause 20, which I am promoting.

Betty Williams: My hon. Friend is making a powerful case for new clause 20. I appreciate that he is not a prophet or the son of a prophet, but I am sure that he has given great attention to the case that he is making. Does he believe that new clause 20 will cover all the losers whom Members of Parliament across the country have been trying to help in the past few months?

David Taylor: I do, and the new loser bandsthe bands for those who have residual uncompensated lossesapply to those with an income from around 6,400. The bands still run up to 7,600, and now, because of the 120, they taper out at 13,600. That is the umbrella of income under which people still have uncompensated losses. We are talking about a maximum of 120, which is still at that 7,600 point. The figure involved is 1.1 million people; we are not talking about dribs and drabs. Typically, constituencies represented by Labour Members of Parliament have 2,000 or perhaps even 2,500in some cases there are 3,000such individuals or families. To Members of Parliament, 120 a year may not seem a substantial sum, but to families who are up against it, with high and rising core prices, even an addition of 10 to their monthly income can be helpful, crucial or valued.
	There was a choice, the Chancellor went for the simple and expensive option, and I am effectively adding to new clauses 11 and 12 my own humble attempt to refine the announcement in a way that would deal with those 1.1 million people. My scheme would build on the announcement, and it is, I hope, simple, accurate and inexpensive: 66 million seems to me to be good value if it gets rid of a political, financial and fiscal problem. There are plenty of sticks lying around for the electorate to beat us with, but let us at least put one of them on to the bonfire.
	My purpose in tabling new clause 20 was not to seek a method of beating the Government in the Lobby. I have not been the most persistent loyalist in recent years; I have had my concerns about a range of Government policies, and I have expressed my unhappiness through the votes that I have cast on a variety of topics. However, on this issue, my purpose was to ensure that the matters were debated and that an option was aired for the Chancellor to consider when he analysed the background to his pre-Budget report. I am not wedded to the scheme; it is just a suggestion.
	The Treasury Committee received from the Institute for Fiscal Studies and others a range of ideas, and equally they might work. They have their costs, weaknesses and strengths. I believe that my suggestion would work, and I commend it to the House. I reserve the right to press the new clause to a Division if necessary, but when the Minister responds, I want to hear an absolute copper-bottomed, concrete-rooted guarantee that the Government, and the Treasury team in particular, are focused on those 1.1 million people. There are perhaps 2,500 such people in the Minister's constituency, and they are important.

Kelvin Hopkins: Just before my hon. Friend finishes, does he accept that the Government would do well to look at the whole income tax system for the future and to take an opportunitycertainly in the next Budgetto make the system more progressive, more redistributive and more graduated in the middle range, with higher taxes on the rich and distinctly lower taxes on the poor?

David Taylor: My hon. Friend and I are both regulars at Treasury questions, and we often express such sentiments and point to the fact that if tax evasion and avoidance in the UK economy were more effectively tackled, it would produce a stream of revenue that would resolve some of our problems in respect of council housing, free accommodation for those in social care and so on. However, Mr, Deputy Speaker, I sense that you want me to return to the track and not to be seduced by the pretty scene that my hon. Friend paints for me.

Paul Truswell: At the risk of briefly seducing my hon. Friend further, I should say that many older people who have contacted me believing that they have lost out because of the withdrawal of the 10p tax rate are actually losing out because their tax code is wrong and they do not receive their full age-related benefit. Is that not the other side of the coin, and a matter that we need to pursue to ensure that people are taxed properly?

David Taylor: About six weeks ago, I was sitting in the front room of a retired miner who had a relatively low retirement income. I would guess that he was about 70 or 71 years old, and he was certainhe had rung me up in high dudgeon, so I dashed the two miles from my office to where he wasthat the Chancellor's abolition of the 10p tax rate had left him with a higher tax burden. However, he was wrong, and I pointed out why. His British Coal superannuation scheme had been slow to implement the much higher personal allowance that the 2007 Budget had provided for from 6 April 2008 precisely to cater for the abolition of the 10p rate, among other things. So my hon. Friend is right: more people felt that they had been adversely affected than had actually been in practice. There has been more concern, hostility and disapproval among not only those who have lost out themselves, but those who have observed our party for a generation and more and believe that what we did at that time did not sit easily with the objectives for which we have fought and will continue to fight.
	I have about two more sentences to say. My requirements are that we should have a copper-bottomed guarantee that the Treasury team will focus on the 1.1 million people still affected, that those people will get full and precise compensation66 million is trivial in Treasury termsand that that compensation will be delivered as rapidly as is humanly possible, ideally within the 2008-09 tax year.
	Let us hear what the response will be when we get to the pre-Budget report, but the guarantee has to be copper-bottomed, otherwise we will be in the position highlighted by my right hon. Friend the Member for Birkenhead (Mr. Field). After a successful party conference that has boosted our morale and narrowed the gap with the Conservative party, and after we have gone from minus 18 to plus 3, or something like it, we will want to take advantage of the situation and soar into the stratosphere. We will not want to be encumbered by having the Chancellor come back to the Dispatch Box having hatched a deal for the 1.1 million people that is not adequate. I want to hear from the Minister words that will satisfy me; otherwise, I shall press new clause 20 to a Division.

Jeremy Browne: In a manifestly sincere and decent speech, the hon. Member for North-West Leicestershire (David Taylor) said that one has to read to the end of the Treasury Committee report before finding out whodunnit. I can reveal to anybody who does not wish to read the entirety of the report that we all know who committed the crime on this occasion: the Prime Minister.
	The writing of the history of the Brown premiership may be quite imminent. I am not given to bettingnot least because it is a good way to lose moneybut I see that the shortest odds on the Prime Minister's time of departure are for the final quarter of this year and that the second shortest odds are for the third quarter of this year, the quarter that started today. The end may be fairly imminent. When the history of the Brown premiership comes to be written, people will offer many explanations on how he came to be such a disappointment in the post. They will say, for example, that he should have called the election in November and that that was a great missed opportunity. They will say that the lost tax discs were indicative of a wider malaise in the Government and that the visit to Iraq during the Conservative party conference made it hard for the Prime Minister to sustain the position that the era of spin had come to an end. All kinds of explanations will be offered on why he failed to live up to expectations, but the one that will last longest in the public mindbecause it is not to do with Westminster political to-ing and fro-ing, but with the everyday lives of millions of peoplewill be the fiasco of the doubling of the 10p tax rate.
	Let us look back, as the hon. Member for Runnymede and Weybridge (Mr. Hammond) did, to the announcement that the Prime Minister made in his final Budget speech as Chancellor of the Exchequer. As the Treasury Committee rightly says, there are huge dangers in seeking to pull rabbits from hats, but that is precisely what the then Chancellor sought to do. It was a manifestly political moveabout his positioning, his inheritance and his wanting to be perceived as the rightful heir to Blair, a mantle that he was keen to claim from the right hon. Member for Witney (Mr. Cameron). Labour Back Benchers cheered with great fury. I have been a Member of Parliament for only three years, so I have not had the opportunity and privilege of witnessing many Budget speeches. The Budget speech that I am talking about was significant, because it was the final one of an extremely long-standing Chancellor who had served in office for a decade. We remember that the Labour Back Benches resembled a football stadium after a winning goal had been scored in the last minute. There was a sense of euphoria that their man had come up with such a brilliant schemethat he had out-manoeuvred the Conservative party and made it inevitable that he would become the Labour leader and Prime Minister and that Labour would go on to win the next general election.
	That was emphatically the mood among Labour Back Benchers on that day, so it is hard to believe, looking at them now, that that was ever their belief. As far as I can work out, the only Labour Back Benchers who now attend these debates are those who are critical of Government policy and wish to express their criticism. I am happy to give way to any Labour Back Bencher who thinks that this policy has been handled with perfection throughout the process, and perhaps we can all learn from that. I suspect, however, that there are two types of Labour MPthose who openly say that it was a fiasco and those who believe that it was a fiasco but do not say so openly.
	The tragedy for the Prime Minister is that this is the man who said,
	best when we are boldest...best when we are Labour,
	yet has fallen down in trying to ape and emulate the Conservative party in his appeal to the population as a whole. He wanted to be the Chancellor and the Prime Minister who reached the promised land of the 20p basic tax rate, thereby managing to achieve what the Conservatives did not achieve in 18 years in government. Even his heroine, Margaret Thatcher, whom he invited to Downing street to celebrate her achievements, had not managed to reach the 20p basic tax rate, yet here he was showing how it could be done. It was an extraordinary measure for him to implement. So overtaken was he by this sense of destinythe sense that he could square the circle, rise above party, become the father of the nation and unite all these discordant political threadsthat he completely failed to notice that 5.3 million people, the poorest people in the country, would lose out as a consequence of his policy.

John Redwood: In the midst of this diatribe, does the hon. Gentleman have any thoughts on the new clauses before us?

Jeremy Browne: I have plenty of thoughts, and I will unveil them all. I should compliment the right hon. Gentleman. The Conservative party is in a very optimistic mood about its prospects at the moment, and I see that one Conservative website is asking its readers to pick the dream first Conservative Cabinet. One has to be careful about schadenfreude

Mr. Deputy Speaker: Order. With great respect, the hon. Gentleman has spent enough time setting the scene; perhaps he can now deal with the new clause before the House.

Jeremy Browne: I will reveal on some other occasion what the website said about the right hon. Member for Wokingham (Mr. Redwood), but it was extremely positive.
	What I am saying is relevant, Mr. Deputy Speaker, because the motivation for doubling the 10p tax rate was entirely party political. It had nothing to do with alleviating poverty. Anyone could see with only a moment's examination of the policy that it was going to be disadvantageous to millions of the poorest citizens in the country. With respect, if my analysis is somewhat party political and partisan, it is because that was the Chancellor's precise motivation when he introduced the policy.
	Labour Back Benchers cheering euphorically and waving their Order Papers was phase 1 of the Labour party response. Phase 2 was the rebellious phase, when the right hon. Member for Birkenhead (Mr. Field) marched the Government to the top of the hill, in effect taking on the role of Prime Minister and deciding Government tax policy from the Labour Back Benches. It was an extraordinary act of revenge on his long-term nemesis that was interesting to watch and enjoy from these Benches. That rebellion was extremely successful. We then had a mid-term mini-Budget in which what the Treasury Committee describes as
	probably the least bad option
	was brought forward by the Chancellor despite protestations that he would not do so.

David Hamilton: Will the hon. Gentleman get to the point? What is the Liberal position?

Jeremy Browne: I am getting to the point, but the Labour party could learn much from the process because it is instructive on the way in which a political party that has lost its moorings and is trying to position itself in a way that is advantageous to Opposition parties can end up [Interruption.]

Mr. Deputy Speaker: Order. We must not have sedentary interventions.

Jeremy Browne: I am grateful, Mr. Deputy Speaker.
	The second phase was the extremely successful rebellion that the right hon. Member for Birkenhead led. We must give him great credit for being the architect of much Government fiscal policy.
	The third phase was the climbdown, with the right hon. Gentleman rightly apologising for some of the more personal elements of his comments about the Prime Minister. He also expressed his great gratitude because the problem had been resolved and put to bed, and the Chancellor of the Exchequer had found a solution. Of course, there was a problem with the solution: the Chancellor was spending 2.7 billion that he did not have2 billion of which was going to people who were already net beneficiaries of the tax changes. Nevertheless, there was a sense that peace had broken out on the Labour Back Benches and that the issue had been resolved.

Si�n Simon: I am sure that the hon. Gentleman told the Tories five minutes ago that one had to be careful about schadenfreude, yet he seems to have had it injected into his arteries. Will he please get on with the business of telling us how high the Liberals would raise the tax?

Jeremy Browne: I am doing precisely that. However, as I have already said, the motivation for the measures was not helping poor people. Those who believe that our constituents on low to middle earnings welcomed the doubling of the tax rate delude themselves. The motivation was to ensure that Labour's poll ratings went into the stratosphere. Judging by the effect of the policy, as well as other mistakes that the Prime Minister has made, on Labour's poll ratings, it did not have its intended consequences. However, that does not mean that improving poll ratings was not the motivation.

Frank Field: The hon. Gentleman is not a betting man but we are. What odds would he give on his touching on one of the amendments before he finishes speaking?

Jeremy Browne: They are extremely high. I tabled one new clause and one amendment. They are excellent and I recommend them to hon. Members, but they would not be necessary if the Prime Minister had not sought to wrong-foot the leader of the Conservative party and achieve the Thatcherite dream by pulling a rabbit out of a hat and doubling the 10p tax rate, which adversely affected the income of 5.3 million households. That is a reasonable point, although I can understand that Labour Members do not want to dwell on it.

Si�n Simon: rose

Jeremy Browne: I will give way again to the hon. Gentleman so that he can tell me which of the 5.3 million households have written to him, expressing gratitude for the previous Chancellor's policy changes.

Si�n Simon: The hon. Gentleman has made it clear that he distrusts the motivation of the Prime Minister when he was Chancellor for reducing the basic rate of income tax to 20p. He must have said that a hundred times. Will he please now tell us how high the Liberals would have raised the basic rate and what they would do about everything else?

Jeremy Browne: We had a long discussion in Committee on precisely that point and I can repeat it for those who were not present, although the hon. Gentleman was. Our party policy is for a basic rate of 16p in the pound. We believe that people on low incomes are paying too high a proportion of their income in taxation. We do not agree with the Conservative party policy positionthat the Conservatives will match whatever level of tax the Labour Government set. That is not right or responsible, so we are in favour of lower marginal rates of tax for people on low and middle incomes. I will revert to some of the other proposals shortly.
	Let me complete the phases of the Labour rebellion. We began with the joyous response, then we had phase 1 and we moved to the third phase, which was the climbdown. Now we are in the fourth phase, which is rebellion rising up again. That must be a source of great dismay to the Financial Secretary and the Prime Minister, because I suspect that they thought that the issue had been quietly put to one side. Eighty per cent. of those who were losersroughly speaking, about four out of five of the losers from the doubling of the 10p ratehad been bought off.
	What is more, millions and millions of people who were net beneficiaries had been given even more money, although they will all have to repay it eventually. Indeed, we will all have to repay it eventually, because borrowing is, after all, only deferred taxation. In the short term, however, people have more money in their pockets. I assume that the calculation that the Chancellor and the Prime Minister made was that if they could buy off 80 per cent. of the losers, the remaining 20 per cent. would fall by the wayside and not many people would notice. By definition, they were the poorest 1.1 million people, and in many cases probably do not have the loudest voices or the best opportunities to make their grievances known. That was the political calculation.
	Of course, I acknowledgeothers have made this point, including the hon. Member for North-West Leicestershirethat there is always a difficulty on these occasions over whether to go for the simple, easy-to-understand, less well focused and therefore possibly more expensive option or the complex but more targeted option. What the hon. Gentleman has proposed, aligned with what the Government propose, means that they are jointly going for the option that is both expensive and complex. That is probably quite a messy solution, although if they cover all their basesthat would be the result of the hon. Gentleman's amendmentthey can ensure that everybody is fully compensated. The obvious question is why we got ourselves into this mess in the first place, and that is what I have been trying to help the House understand in the past 10 minutes.

Frank Field: The odds on the hon. Gentleman reaching his amendment before he sits down are changing as the hours go by. One useful thing that our constituents would like to know is whether, given that the Government have increased allowances, he would advocate clawing that back next year or making it part of the tax threshold.

Jeremy Browne: That is precisely what I am waiting with bated breath to hear the Financial Secretary announce [ Interruption. ] I do not always agree with the Conservative spokesman, but the woes and ills of the Labour party are not my No. 1 priority, either. To be honest, one would think that there were enough people in the Labour party wondering where it all went wrong without the need for anybody else to supplement that process. My concern is with the 5.3 million people in this country whom the then Chancellor and now Prime Minister sought, as a deliberate act, to make poorer, even though they were the poorest people in the country. He did that so that he could claim that he was a better heir to Blair than the leader of the Conservative party, make a connection with middle English, despite the fact that he is not English himself, and be an exciting and reforming Prime Minister who could win a fourth term for Labour and reach the promised land of a 20p basic rate, which Margaret Thatcher never achieved.

David Taylor: rose

Jeremy Browne: That was the motivation, so Labour Members can talk about the politics and I will talk about the 5.3 million, which I will do after I have taken this intervention.

David Taylor: I may have had too long a slot earlier, but is the hon. Gentleman familiar with the internet slang term ROFL, which stands for rolling on the floor laughing? That is what those watching this who take an interest in politics must have been doing when he said that he was not really interested in the woes of the Labour party, because he has spent 18 minutes trying to stir the pot in a party political way.

Jeremy Browne: It was not me who started it; it was the Prime Minister, with such an appallingly ill-judged electioneering Budget. Anyone who thought that his judgment was sound [ Interruption. ] I give credit to the right hon. Member for Birkenhead, who was one of the, I think, eight Labour MPs who did not sign the Prime Minister's nomination papers

Frank Field: Five.

Jeremy Browne: Only fivewell there we go.
	The right hon. Gentleman's judgment has been immaculate throughout. He realised not only that 5.3 million people would lose out as a result of this process, but that the architect of the policy was not fit to be leader of the Labour party or the country. However, I cannot see anyone else who made such sound judgments.

Rob Marris: rose

Jeremy Browne: I am having difficulty getting to the nub of my argument, so perhaps the hon. Gentleman will allow me to make a little more progress[ Interruption.] I have been very generous and taken many interventions from Labour MPs who are suffering from a collective guilt complex.
	As a result of this deliberate political calculation, 5.3 million people lost out. The Government's response was initially one of denial, and the Prime Minister told the Treasury Select Committee that no one would lose out. However, there now appears to be an acceptance, including by the Prime Minister, that more than 5 million people will lose out as a result of the changes that he announced. There was then a long and protracted process while the Government tried to decide what to do and the right hon. Member for Birkenhead held a gun to their head. Then the announcement was made that the Government were going to borrow 2.7 billion, 2 billion of which would be given to people who were net gainers in any case. And we are now in a position of having 1.1 million people who are still losers.
	What can we learn from that process? I have tabled a new clause and an amendment. The new clause seeks to ensure that, when changes are made to the levels of income tax, a proper assessment is made of the impact of the changes. One of the biggest lessons from this hopeless process must be that sleight of handthe rabbits being pulled out of a hatwill be consigned to history, and that there will be greater transparency in the setting of taxation. Members of the Treasury Select Committee and Members who wish to participate in debates in the Chamber should be able to have the information clearly and concisely set out on who will be the winners and who will be the losers. We should not have to rely on organisations such as the Institute for Fiscal Studies. It is an excellent organisation, but there is no reason why it should have the job of telling Members of Parliament the implications of Government policy for people on low and middle incomes.
	Amendment No. 6 would require the Chancellor to report within six months on the impact of the 10p compensation mechanism on people earning less than 13,000 a year. Labour Back Benchers have expressed support for the principle behind the amendment, which is to ensure that this issue does not disappear into the long grass of politics. We do not want a situation in which everyone vents their fury and expresses their reservations here, after which the Government push their measures through using their natural majority and everyone forgets about the 1.1 million people who are still losers as a result of this change. The Liberal Democrats are keen to guard against that, and I would urge Members on both sides of the House to support amendment No. 6. The hon. Member for North-West Leicestershire estimated that between 2,500 and 3,000 people in a typical constituency remained losers, and the amendment would ensure that their interests would not be forgotten when the political debate rolled on to new territory.

Rob Marris: The hon. Gentleman claims not to have been making a load of partisan points. I shall take his claim at face value; hon. Members can make up their own minds. He has finally got round to talking about his amendment and about new clause 13, both of which deal with transparencyan attractive propositionand with generating reports and information, which is potentially attractive. He claims to be very concerned about the position of the 1.1 million people. Will he therefore tell us why he did not put his name to new clause 20?

Jeremy Browne: I shall deal with both those issues. The hon. Gentleman suggested that I was seeking to be unduly party political and partisan. I was not. I was seeking to explain the Prime Minister's motivation for introducing this policy. His motivation was unduly party political and partisan, and it is very difficult for me to explain that without appearing to touch on the same ground myself. It remains crucial to understanding this fiasco that one also understands what motivated the then Chancellor to introduce the policy in the first place. I can tell all those Members for whom the scales have not yet fallen from their eyes that it was not a concern for the poorest people in this country. If that had been his motivation, he would have rejected the policy instantly. It was done because he wanted to position himself in a way that was politically advantageous over the Conservative party in particular, and to a lesser extent, over other Opposition parties. That was the motivation and that is what has led to the woeful state of affairs within the governing party at the moment.
	The Liberal Democrats have made it abundantly clearafter all, we have not suffered from a lack of debate on this subject and the Finance Bill, which has been discussed for monthsthat our priority for taxation is to reduce the burden on people on low and low-to-middle incomes who, we feel, are paying too much. Why has this become such a salient political issue at this time? It is because food prices, council tax bills and petrol prices are rising and the sort of people who might not have felt the pinch quite so badly when the then Chancellor announced this policythe economy was then still growing at a reasonable rateare now feeling that pinch very acutely indeed. That is why, when the history of the Brown premiership comes to be written, this issue will be seen to symbolise the entire failure of this Prime Minister and this Government.

Si�n Simon: rose

Jeremy Browne: I fear that it will be the final chapter in a rather sorry story for the Labour party.

Lynne Jones: I would like to make it clear to the House that I have never in my life waved my Order Paperand certainly not on Budget day 2007. To me, the abolition of the 10p rate would have been acceptable only had it been replaced with a zero tax band for the same amount of income, and I commented to that effect on the day.
	The majority of the British people have an innate sense of fairness. Whether they vote Labour or not, they see the Labour party as the party of fairness and they look to a Labour Government to implement their policies, including fair policies on taxation. People were so outraged when they learned that some of the poorest people were going to lose out as a result of the abolition of the 10p tax rate because it offended that innate sense of fairness. That sentiment applied not just to the people who were to be worse off, but was shared by many of their friends and neighbours and others who knew about their situation. That is why I supported the amendments proposed by my right hon. Friend the Member for Birkenhead (Mr. Field) in 2007 and why I wrote to the Government expressing my concerns.
	My amendments Nos. 102 to 106 would enable someone who had lost out from the abolition of the 10p rate to opt to be taxed at that previous rate. I have to admit that I did not think up that idea myself; it was based on ideas submitted in a letter to the  Financial Times on 8 May by Mr. John Curran. At that time, I felt that it was worth while to put that option to the Chancellor for consideration. It was certainly not intended as a permanent solution, but as a stop-gap that would have precisely targeted all the losers, so it would have been much more cost-effective than the Government's eventual announcement. I have to say that I wrote to the Chancellor on 9 May; obviously, my letter had not reached him by 13 May, when he announced that the Government's proposed solution was to raise the tax threshold. Despite that alteration, we found that 20 per cent. of the losers were still waiting to be compensated, so I decided to table my amendments and to support the new clauses proposed by my hon. Friend the Member for North-West Leicestershire (David Taylor) to flag up the fact that it was unfinished business.
	We cannot continue with the situation in which 1.1 million families are still losing out from the measure, so I, too, seek cast-iron assurances that the Government will fix that. I wrote again to the Chancellor, and last night received a letter from my right hon. Friend the Financial Secretary. I accept her explanation that it would be difficult for people to identify whether they would gain from my proposals if their terms were combined with the Government's raising of the tax threshold. I will not, therefore, press my amendments, but it is right to debate the matter and for Labour Members who feel as I do to express their concerns and to look to the Government to provide solutions.
	At the end of his speech, my hon. Friend the Member for North-West Leicestershire had an exchange with my hon. Friend the Member for Luton, North (Kelvin Hopkins) on the need to overhaul the tax system to make it fairer. I believe that far too many people on low incomes pay tax, and I find it unacceptable that people on less than half average earnings pay income tax. If we want a fairer tax system, we must raise substantially the threshold at which people start paying tax. I accept that that would have ramifications higher up the income scale, so a smooth clawback from high earners, in as simple a way as possible, would be necessary.
	Like my hon. Friend the Member for Luton, North, I would look to a Labour Government to implement a fair tax system, which takes as many people as possible out of tax altogether, and which is progressive up the income scale. That would require at least one further rate of income taxas long as rounded figures such as 20, 30 or 40 per cent. were maintainedand I would also advocate a 50p rate for those earning more than, say, 100,000 a year. In that way, we could respond to the express view of many people in society that a Labour Government should implement fair taxation.

John Redwood: I urge the Government to think again, and more promptly than their timetable suggests. I do so because many of our constituents are worried sick about the state of their family budgets. Food prices are rising rapidly, and the combination of tax increases and price increases is putting enormous pressure on family energy budgets, especially to meet the fuel bills for motor cars, which many people need to get to work or to the shops, especially in rural areas. At this juncture, the last thing that such people need is extra pressure on their respective budgets from the kind of tax increase that we are discussing. The Government would be well advised to think again about their timetable, and to consider whether they can go further to respond to this very serious and good debatewith perhaps one exception from the Liberal Democrat Benchesand to make people feel a bit easier about their future and their family budgets.
	My hon. Friend the Member for Runnymede and Weybridge (Mr. Hammond) has asked the two crucial questions. The first question is: what will be done next year? Is the package for one year only? Surely when people are worried about whether their income will stretch, they need some earlier indication of what might happen in the following year. The second question is more urgent and important today: what will be offered to the 1.1 million people, who, as the Government admit, along with their critics, are losing out from the mishandled package of tax changes? Can there be some statement to reassure them? I was disappointed that the Minister did not choose to inform the debate more at the beginning. Paradoxically, that has required her to listen to rather more critical commentsand I suspect there may be further such comments if other Members catch your eye, Mr. Deputy Speakerbefore beginning to allay some of the fears that have been expressed. When I offered her an opportunity to reaffirm the promise that I thought the Prime Minister had made to the right hon. Member for Birkenhead (Mr. Field) that all the losers would be compensated, it was with regret that I heard that she could not do so. There seemed to be some backsliding.
	As I listened to the very reasonable and sensible speech of the hon. Member for North-West Leicestershire (David Taylor), who came up with a relatively cheap package, I did not see the Minister leap to her feet and say that it would not do the job. Nor did I see her leap to her feet and say that, compared with the 2.7 billion that the Government have managed to find from borrowing to deal with the first part of the problem, this was a very cheap solution, and that she would either adopt it or view it very sympathetically. Many Members, understandably, will feel that the hon. Gentleman deserves better. I hope that in her response the Minister will consider his suggestion carefully, and will tell us either that there is a cheaper and better way of delivering what is needed, or that the Government will adopt it.
	I understand why my hon. Friend the Member for Runnymede and Weybridge, who has no access to the Treasury computer, the Treasury models, the Inland Revenue figures and so forth, cannot come up with a scheme that would fill the hole in the cheapest way possible. I also understand why, conscious of the massive over-borrowing that is currently taking place, he is reluctant to offer any proposal that would add to that, when it is the Government's duty to present the House with such a proposal. I hope that the Government will indeed present proposals to try to satisfy those of us who are worried about their over-borrowing by reducing some of their waste and unnecessary spending, along with the proposals that are so desperately wanted by Members throughout the House to help those on the lowest incomes in society who have been at the wrong end of the measures that we are discussing.

Si�n Simon: The right hon. Gentleman has spoken of proposals to find a way out of the problem that have been made by Members across the House. He has mentioned some of the interesting and innovative ideas that have emerged from those on the Labour Back Benches, and the contributions from his own Front-Bench spokesman. Have I misunderstood something, or have the Liberal Democratsnotwithstanding the extraordinary 20-minute diatribe that we heard earliernot tabled any amendments with any proposals that have anything to do with helping out of their difficulties any of the people about whom they keep claiming to be so concerned?

John Redwood: The hon. Gentleman has made an effective partisan point in his own way. That is also my understanding of the position. However, this is a serious debate, and I do not think we expected the Liberal Democrats to come up with a means of solving the problem for our constituents. We heard a long diversionary diatribe that might have been appropriate in a grand Second Reading debate or as part of heated exchanges, but now, on Report, we are trying to find a working solution, and there are solutions on offer.
	We naturally look to the Minister for leadership, because she has access to the figures and because she and her colleagues were the architects of the circumstances that caused this particular problem. I urge her again to recognise just how much people are hurting out there. Anyone who has been involved in recent political campaigns anywhere in the country will know that the dominant issue on the doorsteps is people's fear of going to the supermarket because the price of food has gone up again, their fear of filling up the car because the price of petrol has gone up again, and their fear of receiving energy bills because the price of energy is going up again. Their wages, for good reasons, are not going up by enough to compensate for that. We all know that there will have to be a real squeeze on people, but it perplexes us that the squeeze is to be more intense on those on the lowest incomes because of this tax proposal. Let me say again to the Minister that we need some kind of offset to tackle that particular twist of the knife.
	As every Member in the House knows, I am a passionate tax-cutter: I always want lower taxes. However, I am keen for the disproportionate benefit of that tax reduction to be felt lower down the income scale, particularly at a time when there is a real fear of the family bills because of the sudden surge of price increases, and a worry that there may be job losses and worse to come as the credit crunch and the squeeze intensify.

Kelvin Hopkins: I recently looked at our history. Between the 1920s Labour Government and the 1980s Conservative Government there was a rise of 73 per cent. in the number of people living in poverty. That was partly as a result of changes in tax policy at that time, and partly as a result of the decision to break the link between earnings and pensions. Therefore, I must admit that I feel some scepticism when I hear Conservatives talking of their concern about poverty.

John Redwood: I do not recognise the hon. Gentleman's figures, but I do know that poverty has been rising recently under this Government, so he should be extremely careful about what he says. People are more interested in today and tomorrow than the dim and distant past. I remember that the Conservative Administrations to whom he refers made sharp reductions in income tax across the piece, thereby benefiting those on lower incomes as well as those on higher incomes, and we were very pleased to do that. Today, I am, however, explaining my personal position in today's circumstances, and I think it is reflected by my Front-Bench colleagues, in that we feel that the squeeze is too intense and that it is not right for it to be intensified by tax measures.
	I remember when the Budget we are discussing was delivered. The big reduction in income taxes for the rest of the peoplethe reduction in the standard ratecame at the very end like a rabbit from a hat. My right hon. Friend the Leader of the Opposition had to rise to respond not having had the benefit of any pre-briefing of what the Chancellor was going to do. In the meantime, the shadow Chancellor, myself and one or two other Conservative Membersincluding, I suspect, the shadow Chief Secretaryhad a quick look at the figures and realised what was going on, and the shadow Chancellor immediately left the Chamber to tell the nation it was not a tax cut but a tax con. That was his phrase, and it summed up the situation extremely well. I was the next Conservative Member after the Leader of the Opposition to speak in the debate, and I explained why we felt this was a misjudgment and that quite a lot of people would lose from the proposal.

Jeremy Browne: I am enjoying the right hon. Gentleman's partisan speech, but, on a point of accuracy, the Conservative party leader welcomed the policy and the first Member of this House who raised the concerns we are discussing was a Liberal Democrat.

John Redwood: The hon. Gentleman is quite wrong. The Leader of the Opposition made a careful and sensible speech for someone who had not had a chance to read the Budget. Everybody else who spoke in the debate had had a chance to read bits of it, and as we well know it is necessary to read the Budget as well as to hear it in order to understand what is going on. For understandable reasons, the then Chancellor was much prouder of the tax reductions than he was of the tax increases, and that needed to be filleted out from the documentation. I am just explaining what happened at the time.
	The Government have had a long time to consider the sensible criticisms that were made at the time of the Budget and subsequently. By now, Ministers must have done an awful lot of homework and figure-work on this problem; they must have been worrying away for weeks, if not months, on the 1.1 million. Therefore, I urge the Financial Secretary to share a bit more of her thinking with us in order to allay the fears among her own Back Benchers and to deal with the sensible criticisms voiced by the Opposition. Above all, she needs to say to the 1.1 million people not just that the Government wish to be on their side, but that they will take a practical measure to try to assuage some of their grief.

Frank Field: I shall be brief, which I think will be found merciful. Let me first, however, comment on the great Liberal lion that roared and roared this afternoon. I thought that at any moment there would be some great proposals to help the lowest paidsuch as we would have hoped for and expected from Lloyd Georgebut what happened? A dribble came out about bookkeeping arrangements and offering transparency. They are not unimportant considerations, but this debate is about how we can help the poorest workers in our society, and on that matter the Liberal Democrats spokesman managed, under great prompting from Labour Members, to devote two minutes of his time and had no proposals on the amendment paper that offered any hope.
	I rise to speak in favour of new clause 20. I come to praise the Government, but also, as gently as possible, to leave a warning with my right hon. Friend the Financial Secretary. I do not intend to rewrite the history, as some have been trying to do, of the events leading up to the Government's additional Budget measures to compensate most of those who lost out from the abolition of the 10p rate. All I wish to say to the Government is that although many of the leadership thought that I was running some sort of campaign, I do not think that we sent out even two e-mails on the issue. Labour Back Benchers responded instinctively on this issue. There was real anger felt that, for whatever reasonthrough oversight or by designthe burden of the Budget should fall on the very poorest. It was that anger that led to the Government's statement.
	We should all remember that when the negotiations were going on, we all thought that the Government would say nothing until November. The Government brought forward what we intended to be only part of the measures of compensation. All of us were content at that stageI certainly wasthat we would not see anything until November. The Chancellor of the Exchequer sent my right hon. Friend the Member for West Dunbartonshire (John McFall) off with his Committee to inquire into the matter and bring back proposals. The Chancellor would then come to the House with a set of measures to compensate those who had lost out. Let us remember the lead-up to this debate: none of us expected the Government to do anything until November. The Government have given details of many of their plans that will come into force in September. We do not think that they go far enough, but we should praise the Government for what they have done.

Si�n Simon: Is my right hon. Friend saying that the serious changes that will affect the lives of millions of our poor constituents have come about through a spontaneous outpouring of pressure and concern from Labour Back Benchers? The right hon. Member for Witney (Mr. Cameron) and the hon. Member for Tatton (Mr. Osborne), and the Liberal Democrat Front Benchers, gave the impression that they were foremost in bringing this important matter to public attention. Is it actually because of pressure by Labour Back Benchers that our poor constituents will be looked after in this way?

Frank Field: It is indeed. A year ago amendments were tabled to the Budget by Labour Members, and a considerable number voted for them, but the Conservatives sat on their hands.

Philip Hammond: I have great respect for the right hon. Gentleman, and he deserves credit for keeping this issue before the House and forcing the Government's hand, but he is a little disingenuous when he says that we did not expect the Government to act until the pre-Budget report and how wonderful it was that they suddenly decided to act in May. They acted in May because their opinion poll ratings were falling through the floor and they were losing a by-election.

Frank Field: We can all impute motives to others, but the record says that, when we discussed with the Government what they might do, we all expected no statement until November. The statement is not complete as it is, and we are pressing the Government further today, but I merely record the events. There was an anger that I have not seen on our Benches before and a willingness to ensure that the Government brought forward measures to compensate the poor. There was no campaign on this sideonly a couple of e-mailsbut Labour Members felt intensely strongly about the issue.
	We have two options before us tonight. We are waiting for my right hon. Friend the Financial Secretary to say what the Government intend to do and whether she will give us the promise that we require. If she cannot go the whole hog tonight and we are not satisfied, we have new clause 20. We will also have the pre-Budget statement itself. If enough of us feel at that stage that the Government have not fulfilled the promise that we thought that they were making to our poorest constituents, a motion will be tabled. I cannot believe that if those on the Labour Benches again make their views known, the Opposition will not try to exploit that by giving us time to debate the subject. However, that motion will be debated in our name and we will not follow what the Opposition ask us to do in the Lobby.

Philip Hammond: In a sense, the right hon. Gentleman has answered the question I was going to put to him. Why does he not support new clause 4? I hope that his reason is not solely that it is tabled in my name and those of my right hon. and hon. Friends. I spoke quite deliberately about it in terms of giving Parliament the last say and I drew attention to the fact that according to current parliamentary arithmetic that essentially means giving the group of 50 or 60 Labour Back Benchers who have been most active on the matter the final say over whether the measures announced in the pre-Budget report are acceptable or not.

Frank Field: The hon. Gentleman knows the unwritten rules of the House and how they operate. The last say will be with those on the Labour Benches, through new clause 20 or when the pre-Budget statement comes back. Other people might wish to assist us in achieving that objective but all I say to my right hon. Friend the Financial Secretary is that during my 30 years in the House I have never experienced a group of Back Benchers instinctively reacting in the way that we did. If we do not get satisfaction tonight with new clause 20, we will return to the subject in November. We are not prepared for the year to pass by without the Government's bringing forward measures that, as my hon. Friend the Member for North-West Leicestershire (David Taylor) has laid out, fully compensate every low-paid worker who loses out from the abolition of the 10p rate.

John McFall: I am pleased to be speaking on behalf of the Treasury Committee. On Second Reading, I said that the Committee would undertake an inquiry arising from the controversy over the removal of the starting rate of income tax. The result is the report that was published on Saturday, which, I am glad to see, has been welcomed in the House and outside. It is a complex document, reflecting the complexity of the subject. It includes more than 70 pages of the report and recommendations and more than 170 pages of evidence, both oral and written.
	I had best refer Members to the summary, which documents the five main subjects that we considered. The first was low-income households and the abolition of the starting rate. We said that the losers were those with a small taxable income for whom the loss of a small amount of money was significant when managing a budget at a time of rising prices, particularly rapidly rising energy and food prices.
	Secondly, we considered the options for 2008-09 and the changes made on 13 May. The problems arose from a removal based in the tax system, and our main recommendation is that the solution should be required to be in the tax system. Thirdly, we looked at the broader context and the poverty targets, to which I shall return later. Fourthly, a big lesson for the Government is the need to get the process right. They need to learn the lessons from the budgetary process and to use the pre-Budget report as it should be used. They should not turn the pre-Budget report into an early Budget.
	Finally, we considered the way forward, which concerned no reforms other than those to the tax system. The 15 May announcement on increased personal allowances is, the Committee says, a welcome step to a simpler tax system with fewer of the low-paid paying income tax. The Treasury should resist introducing further complications to the system. Every effort should be made to avoid returning those who have been taken out of the tax system by the 13 May changes back into the system.
	I want to concentrate on three brief points. The first is the relationship between tax and poverty priorities. The second is the use of the tax system for further compensation measures. The third is the provision of information by the Treasury and the role of the pre-Budget report.
	On the relationship between tax and poverty priorities, our report's detailed analysis makes it clear that the losers from the removal of the 10p band do not equate to the very poorest in society. However, we also highlighted the danger that the household analysis may assume income-sharing in households that does not take place. The Government must pay heed to that.
	Also, the tax system needs to be considered alongside the welfare system. The system as a whole is not working as well it should, as is shown by the rise in child poverty in 2006. That figure rose by 100,000 to a total, before the deduction of housing costs, of 2.9 million children in poverty. Moreover, there was a sharp rise in pensioner poverty in 2006-07: before housing costs were deducted, that total rose by 300,000. Those figures reversed the tremendous improvements that this Government have made in both areas since 1997, and it is important that we get the Government to return to achieving success in the broader context when it comes to poverty.
	The Committee received powerful evidence that successes in combating poverty have concentrated on the non-working poor. Many people still find that work is not a pathway out of poverty. In-work poverty is an important problem, as we highlight in our report.
	The Government must solve the running sore of the abolition of the 10p tax rate, not least so that they can concentrate on more effectively on their long-term priorities in respect of poverty. The Committee made one recommendation that did not get as much attention at the weekend as others did. We proposed that a poverty commission should be established to help with the focus on poverty. The Pensions Commission, chaired by Lord Turner, achieved a lot. It was an independent, non-political body and its recommendations to the Government were listened to. I feel that a poverty commission could be a similar organisation: it would comprise independent and non-political people, and would provide an important way of keeping the Government on target. After all, this is the only Government to have set out an ambitious agenda to eliminate child poverty by 2020. If the Government are to achieve their ambitions by 2010, they will have to meet stretching targets: indeed, to do so, they would have to reduce child poverty by 300,000 every year over the next four years. That is ambitious, but they must not give up on that aim. It is important that they continue to concentrate on it, and so I hope that they will take that recommendation very seriously.
	Our second recommendation has to do with the use of the tax system for further compensation measures. The Committee report identifies further developments of the tax credits and benefits system that may be needed, in the medium term and beyond, to tackle poverty. However, we are clear that the only way to reach all those who have lost out as a result of the removal of the starting rateand to compensate all losers in low-income householdsis through the tax system. The Government should not meddle with tax credits or anything else, as compensation should be provided through the tax system.
	We identify a range of options through the tax system: none is perfect, but we give the Government an option menu. I concur with my right hon. Friend the Member for Birkenhead (Mr. Field): this subject was discussed on Second Reading, and if the Government had waited, that might have allowed them to find a more measured way to tackle the problem. However, we have to deal with reality, and my message to the Government is that any solution must be achieved through the tax system, in a measured and considered way.
	We do not identify a preferred solution, as the Treasury is best placed to do that. However, the key point that we make is that the changes announced on 13 May and implemented by the proposals before the House are the start of the process, not the end. It is very important that the Government take that on board.
	My final point has to do with information and the use of the PBR. We seek to identify lessons from the 10p tax saga for future Budget policy making, and draw two main conclusions. First, the Government must be clearer and more open about the distributional effects of their policies, and we recommend that a household impact assessment accompany each Budget and PBR. If such an assessment had been compiled when Budget 2007 was produced, the Treasury Committee would have had time to study it at our leisure. We would have identified both winners and losers, and we would have known where we were going. Any future changes must delineate the winners and losers, as otherwise we will return to opaqueness and confusion.

Philip Dunne: I am very grateful to the right hon. Gentleman for giving way to me, and my intervention will be brief. He is making a key point. His suggestion would help this Chamber to debate these matters, and if such an arrangement had been in place earlier, it would also have helped Ministers when they were making the original decision. The Treasury's permanent secretary told us that the full distribution analysis was available to Ministers when the decision was made in 2007. If so, why has it not been published subsequently, so that we could all see it?

John McFall: There was a lot of conflicting evidence. I well remember the director of the budgetary process coming before the Committee. He was asked how many losers there would be. Was the total 5.3 million? We asked him that question many times, and at last he responded by saying that that might be the ballpark figure. It was all conjecture, but we want certainty. The Government must bear that in mind in future.
	The Committee's report also emphasises the benefits of proper consultation about personal tax measures. We return to a theme that we have identified beforethat the Government can and must use the PBR more as a tool for consultation. The outcome would have been better if that approach had been adopted in respect of capital gains tax, inheritance tax and the non-domsand I could list more examples. The Government should not use the PBR as an early Budget. They should not spring surprises on us: instead, they should use the PBR for consultation purposes, as it was intended. Then, people will not be surprised or disappointed by the content of the Budget when it is announced, because the appropriate the consultation will have taken place. That is an extremely important lesson for the Government to learn.
	I hope that the Government will learn the lessons set out in the report, and that our experience of what happened with the abolition of the 10p tax rate will not be repeated.

Jane Kennedy: I think that I was right to say at the start of the debate that it would focus on the genuine concern on this side of the Chamber about the 1.1 million households that are net losers as a direct result of the abolition of the starting rate of income tax

Philip Hammond: Will the Financial Secretary give way?

Jane Kennedy: No. I shall deal with the opportunism that I have heard from the Opposition parties in a moment.
	I was grateful to my hon. Friend the Member for North-West Leicestershire (David Taylor) for the terms in which he spoke, and I shall use the same tone in my comments. The uncharitable might argue that those on the Treasury Bench had afforded Opposition parties the opportunity to make hay with this subject. The amendments that they have tabled are all about producing reports, and my right hon. Friend the Member for Birkenhead (Mr. Field) was right to draw attention to the speech made for the Liberal Democrats by the hon. Member for Taunton (Mr. Browne). If he had heard the speech in favour of the ten-minute Bill earlier this afternoon, my right hon. Friend would have heard much more interesting and entertaining proposals about transparency than the hon. Gentleman managed.

Philip Hammond: The right hon. Lady has implied that the concern on the Conservative Benches was somehow less genuine that that felt among her own Back Benchers. I want to place it on record that this is not a partisan issue, and that hon. Members of all parties feel that it is wrong to decrease the tax burden on middle-income families by increasing the burden on the poorest. The only people who we know were prepared to press ahead with the measure in the knowledge of its distributional impact were Ministers on the Treasury Bench. We now know that they had full knowledge of the effect that the change would have on the poorest families in our society.

Jane Kennedy: I note the hon. Gentleman's comments, and he has made his point forcefully. That was a long intervention, and I heard what he had to say. I am sure that all other hon. Members in the Chamber, as well as people listening outside, will have heard him too. However, my hon. Friend the Member for North-West Leicestershire drew to the House's attention the often misstated position in terms of the proportion of public spending that we are accused of engaging in, compared to the Governments of the 1980s led by Mrs. Thatcher. He said that public spending by her Governments amounted to more than 40 per cent. of gross domestic product. I hope that he will accept that that caused the failures that led to unemployment. Someone wanting a case study in the politics of economic failure would do well to examine the experience of those days.
	I say to my right hon. Friend the Member for West Dunbartonshire (John McFall) that we welcome his report and will respond fully to it in due course. I heard his comments today, and particularly the emphasis that he placed on the need to get the process right. I was asked a number of questions about why the 10p rate was abolished and why it was introduced in the first place. Members of the House and the public would do well to read my right hon. Friend's report in detail, because it goes into the history of why the 10p tax rate was introduced in the first place, and refers to the Taylor report of 1998. It is well worth reading.
	We wanted to help as many as people as possible this year, and as quickly as possible. My right hon. Friend the Chancellor decided that the easiest and most effective way to do that would be to raise the personal allowance for all basic rate taxpayers by 600. That means that 22 million people on low and middle incomes will gain an additional 120 this year as a result of our new clauses and amendment. Some 4.2 million households will receive as much as they originally lost, or more, and the remaining 1.1 million households will also see their loss at least halve. I shall turn to new clause 20, tabled by my hon. Friend the Member for North-West Leicestershire, and why I hope he will not press it, but I wish to deal first with a couple of other matters.
	My right hon. Friend the Chancellor has made it clear that his aim for future years is to continue to provide the same level of support for those on lower incomes, and that he will make proposals in the pre-Budget report. We are aware of the importance of doing more to help people who have lost out, and we are considering what more can be done. The changes suggested in the Government's new clauses and amendment represent the fairest and most effective way to help a large number of people who have lost out. I appreciate that new clause 20 is not intended to replace the proposals that we made as a result of the Chancellor's statement.

Frank Field: My right hon. Friend gives us a general assurance, but we are asking for a specific assurance. When the Chancellor gives us his pre-Budget report, will he address specifically the 1.1 million households with losses that are not made good by the present measures, which I hope we will all support?

Jane Kennedy: I have been asked whether the proposals will be concrete, whether they will be cast-iron and, by my hon. Friend the Member for North-West Leicestershire, whether they will be copper-bottomed. I cannot find a form of words that will provide a stronger way of saying this. I shall mention some of the things that we have considered, but we intend to make proposals that will do precisely what my right hon. Friend the Member for Birkenhead is looking for. [Hon. Members: When?] In the pre-Budget report. I cannot give my right hon. Friend more detail than that at the moment, because that would pre-empt the work that we are continuing to do, but I can assure him that that is our aim.

John McFall: May I take the Minister back to what the Treasury Committee's report said? We identified the fact that 1.1 million people were affected and said that the Government must make every effort to look for them and compensate them. Will she accept that proposal, so that we will not be disappointed in the autumn?

Jane Kennedy: I do not know how much more clearly I can say it to my right hon. Friend: that is exactly what we are working to do. I have answered the questions. Will they be concrete proposals? Yes. Will they be implementable and bring assistance as soon as possible? Yes.
	I shall deal quickly with various Opposition new clauses and amendments that would require reports. A similar amendment was tabled in Committee of the whole House. I shall then turn to the detail of the amendments tabled by my hon. Friends the Members for North-West Leicestershire and for Birmingham, Selly Oak (Lynne Jones), and explain why I hope they will not press them.
	The result of new clause 4 would be that Her Majesty's Revenue and Customs would have no legal power to collect any tax on the first 2,320 of taxable income. That would impose a huge burden, and it would cost all taxpayers 6.7 billion to finance the change. As we are now more than three months into this tax year, HMRC would have to repay the tax deducted and then ask employers to collect it again after Royal Assent, on the basis of clause 3 of the Bill.
	I hope that the hon. Member for Runnymede and Weybridge (Mr. Hammond) will accept this point in the spirit in which I make it: we have already produced a detailed memorandum for the Treasury Committee's inquiry into Budget measures and low-income households. It outlined the impact that the announcement of 13 May would have. At the time of that announcement, it was made clear that we would set out plans for future years in the 2008 pre-Budget report in the autumn. At that stage, the Chancellor will report back to the House. I see absolutely no merit in requiring him to report back again in January. However, the hon. Gentleman has already indicated that he intends to press new clause 4 to a Division, so I obviously cannot persuade him from his view.

Philip Hammond: May I explain my logic? What the Minister is saying is entirely consistent with our pressing the new clause. If she can satisfy her Back Benchers in particular with the announcement that the Chancellor will make in his pre-Budget report, she will have nothing to fear from new clause 4. For those of us who are of a cynical disposition, it is an insurance policy for the House.

Jane Kennedy: I knew that I would not persuade the hon. Gentleman. I do not believe that the new clause is necessary.

Jeremy Browne: Will the Minister give way?

Jane Kennedy: I would like to turn to the question of a report on national insurance contributions and the alignment of the primary threshold of national insurance and the personal allowance, but I shall give way briefly to the hon. Gentleman.

Jeremy Browne: I am very grateful. I was particularly keen to intervene because the point that the hon. Member for Runnymede and Weybridge (Mr. Hammond) has just made is entirely legitimate, and applies equally to amendment No. 6. If the assurances that the Minister is giving Labour Back Benchers are to be taken at face valuethere is no reason to assume that they should notshe has no reason to oppose new clause 4, tabled by the Conservatives, or amendment No. 6, tabled by the Liberal Democrats. The only reason for her to oppose them would be if, for some reason, there were good reason to believe that her offers should not be taken at face value.

Jane Kennedy: I have already explained why making a report in January is not necessary, as we shall make one in the pre-Budget report. As for the report suggested in the hon. Gentleman's amendment No. 6, it is true that the changes that we are proposing mean that the primary threshold and the personal allowance will no longer be aligned. However, we should see that in the context of the progress that we have made in aligning tax and NICs whenever possible. We have simplified the structure of employers' national insurance, replacing multiple rates with a single rate and abolishing the entry fee. With just two main rates of income tax and two rates of national insurance in this tax year, the UK's personal tax system is already one of the simplest in any developed country.

David Taylor: Will my right hon. Friend give way?

Jane Kennedy: I have something to say about my hon. Friend's amendment.

David Taylor: I will wait, in that case.

Jane Kennedy: I should tell the House that I believe that new clause 6, tabled by the hon. Member for Runnymede and Weybridge, is technically flawed. [Hon. Members: Why?] I can tell hon. Members why. Subsection (1)(b) states that the basic rate limit is set out in section 10(2) of the Income Tax Act 2007, but in fact it is in section 10(5). Also, the new clause does not recognise that with tax calculated annually and national insurance weekly, it would be rare for the two to be exactly aligned. Requiring a report every time they were not aligned is unnecessary. I hope that the hon. Gentleman will accept that.
	Turning to the substance of the debate, we have focused on what needs to be done to address the problem described by my right hon. and hon. Friends. Amendments Nos. 102 to 109 envisage two parallel tax systems. One would have three rates of tax10 per cent., 22 per cent. and 40 per cent.and the other would have two rates of tax20 per cent. and 40 per cent. What I am saying formed the substance of the letter that I sent to my hon. Friend, but it is of value to explain why the amendments would not work, although we have considered them. Individuals could choose to be taxed under one or the other system at any time during the tax year. They could change their mind at any time over an unspecified period. We have estimated that the amendments would cost about 1.8 billion.
	I am afraid that the proposal would prove to be unworkable for individuals, for employers and for HMRC. Two parallel tax systems would require employers and HMRC to set up a new system over and above the one currently in place. That in itself is doable, and if it were the right thing to do, it might be necessary to do it, but, most importantly, I am not convinced that individuals who have lost out from the changes would find such a tax system beneficial. Two different systems would be confusing and impossible to understand for some taxpayers and hon. Members will acknowledge that those in the lowest income groups would find it particularly difficult to judge which system would benefit them. HMRC would simply not be in a position to give advice on such decisions.
	I very much appreciate the manner in which my hon. Friend the Member for North-West Leicestershire spoke to new clause 20. The one thing on which I agreed with the hon. Member for Taunton was his description of my hon. Friend's speech. My hon. Friend spoke with humour but passionately about what is clearly a serious issue not just for him for many of my right hon. and hon. Friends. New clause 20 is superficially attractive. We have had an opportunity to talk through some of the detail. My right hon. Friend the Chancellor made it clear in his evidence to the Treasury Committee that we had looked at what could be done through tapering, but we had to reject it for this year. For instance, I am advised that the new clause would affect 7.1 million taxpayers. I want to explain why that is the case. It would require a further 5.6 million people, most on low incomes, to complete a self-assessment tax return.
	There are 7.1 million people with incomes between 6,400 and 13,600 who would benefit from the extra personal allowance proposed by my hon. Friend the Member for North-West Leicestershire. The average gain for those on lower incomes would be around 60, with an overall cost of some 450 million, because the number of people who would benefit goes so much wider. That is the advice that I am given.

Philip Hammond: We cannot hear.

Jane Kennedy: I beg the hon. Gentleman's pardon.
	There is a much wider group, therefore, than the 1.1 million remaining losers from the personal tax reform package, and that would mean an increase of at least about 5.6 million in the number of people who had to complete self-assessment tax returns. We have considered the taper, and for those reasons, we believe that a taper is not the right way to deliver, in the swift way in which we wish to deliver it, the help that we want to give to address the problem described. Her Majesty's Treasury estimates that the new clause still means that about 200,000 households would not be fully compensated.
	The point about pensioners illustrates the point. People aged 65 or over should benefit from significantly increased personal allowances. Low and middle-income pensioners can have an income of at least 9,030 before they pay tax. However, if individuals are concerned, as has been described this afternoon, that their tax code is not correct, they should obviously contact HMRC, which will seek to correct it as soon as possible.
	It is worth appreciating the fact that for pensioners with incomes over 21,800, subject to a taper to reduce additional allowances, it can be more difficult to get the allowance right in-year because of the complexity of the taper for pensions. That reinforces the point that I have been making that a taper is complex and would inevitably lead to many more people being required to self-assess. So I hope that my hon. Friend the Member for North-West Leicestershire will accept that.

Stewart Hosie: The Minister cannot seriously be suggesting that the need to fill in tax returns is the reason why this will not work. She expects 750,000 people who pay tax on their savings to fill in a tax return to claim back on average 80 from HMRC. If she argues that it is all right for people with low savings income to fill in a tax return, she cannot also be saying that the need to fill in a tax return is the reason why we cannot use a taper in this case.

Jane Kennedy: I am acknowledging that there are difficulties. The number of people who would be drawn into self-assessment is large. They would be precisely the people who would find it difficult to judge which of the two tax rates they would benefit from. Equally, they would find it unnecessarily complex to fill in a self- assessment return, perhaps because they work in more than one job. We considered it, but we decided that it was not the best way to help those people.

Philip Hammond: I sense that the right hon. Lady is close to concluding. Can she tell the House what is the cost of issuing new notices of coding in respect of all employees as a consequence of new clauses 11 and 12 if the House is minded to pass them tonight?

Jane Kennedy: I hope that the House will be minded to pass them. We have said that the overall cost of the proposals is 2.7 billion. We have been completely open. I cannot give the hon. Gentleman the exact detail that he asks for. I do not believe that it affects the proposal that we are putting forward. I hope that the House will support the Government new clauses.

David Taylor: This could be my penultimate intervention. May I bring my right hon. Friend the Minister back to what she said to the Chairman of the Treasury Committee when he asked whether the Treasury would move every sinew to ensure that all 1.1 million would be compensated as rapidly as possible within the taxation system, ideally within the current tax year? Her answer, briefly, was yes. Will she underline that that is what she meant to say, and that she persists with it now?

Jane Kennedy: I made it clear that we were conscious of the fact that 1.1 million people

David Gauke: Households.

Jane Kennedy: Yes, households. They have not been fully compensatedto use the phraseas a result of the changes that we proposed in May. I am conscious of the welcome that those proposals have had from the House. I cannot say more at this point about the detail of what we intend to do, but I hope that my hon. Friend will accept that we are focused on this point. We are not complacent. We appreciate that there is work to do to help those individuals. That is what we are working to do. We will introduce proposals in the pre-Budget report.

Several hon. Members: rose

Jane Kennedy: Several hon. Friends are obviously hoping to offer help at this point.

Frank Field: May I add to that point? Am I right in thinking that when my right hon. Friend says that the Treasury is focused, she means that it is focused on introducing a package that fully compensates those who are not yet fully compensated?

Jane Kennedy: Yes. I feel as if we are getting close to the most philosophical considerations in this debate. I have repeatedly described exactly the commitment that we have given to deal with the problems that we face. My right hon. Friend the Chancellor has made it clear that neither he nor we are complacent. He made it clear in his statement to the House on 13 May that he would return to the issue in the pre-Budget report. I can again state that to the House. Yes, there will be concrete proposals. Yes, they will address the point. Yes, they will be targeted. Yes, they will be implementable as soon as possible. The amendments and new clauses that my hon. Friends have introducedI do not want to sound patronisingare well intentioned, but I believe that there are serious problems with them, and that they should not be pressed at this stage. We should be given the time to bring forward our proposals in the pre-Budget report in the proper way.

David Taylor: I am grateful to my right hon. Friend for giving way to me again. There are Whips all round the Chamber, who do not routinely see me as a paid-up member of the deferential patsy tendency from which ministerial aspirants are traditionally selected. However, I can tell my right hon. Friend that with a huge amount of trust and good will, which I hope will be repaid in the pre-Budget report, and after great agonising, I shall not at this stage move[Hon. Members: Ah!]. It is all very well people saying that, but I shall not be moving new clause 20, and I underline that point to my right hon. Friend.

Jane Kennedy: I am extremely grateful to my hon. Friend. I take his point, and we accept seriously the trust with which he has charged us. The new clauses in the name of the Chancellor that we have debated this afternoon will bring great relief to the vast majority of householdsmore than 4 millionwho ended up paying more tax as a result of the abolition of the 10p tax band. Overall, the Budgets of 2007 and 2008 made proposals that take 600,000 pensioners and 600,000 other taxpayers out of tax altogether. Our proposals have been widely welcomed, and I hope that our new clauses and our amendment will be supported this evening.
	 Question put and agreed to.
	 Clause read a Second time, and added to the Bill.

New Clause 12
	  
	Basic rate limit

'(1) In section 10 of ITA 2007 (income charged at main rates: individuals), for subsection (5) substitute
	(5) The basic rate limit is 34,800.
	(2) The amendment made by subsection (1) has effect for the tax year 2008-09 and subsequent tax years.
	(3) But until 7 September 2008 for the purpose of ascertaining the amounts deductible or repayable under PAYE regulations it may be assumed that the figure specified in section 10(5) of ITA 2007 for the tax year 2008-09 is 36,000.'. [Jane Kennedy.]
	 Brought up, read the First and Second time, and added to the Bill.

New Clause 4
	  
	Income tax rates

'(1) The amendments made by the provisions of this Act specified in subsection (2) shall cease to have effect at midnight on 5 January 2009 unless the conditions set out in subsection (3) have been satisfied.
	(2) The provisions referred to in subsection (1) are
	(a) section 3(2) and (3), and
	(b) section 3(7)(a) and Schedule 1 (in so far as they relate to the starting rate).
	(3) The conditions referred to in subsection (1) are that
	(a) the Chancellor of the Exchequer shall have laid before the House of Commons a statement setting out the measures taken, or intended to be taken, to mitigate the effect of the amendments made by the provisions of this Act specified in subsection (4), when taken together, on those for whom such effect is a net increase in income tax payable, and
	(b) the House of Commons shall by resolution have approved such statement.
	(4) The provisions referred to in subsection (3) are
	(a) sections 1, 3(2) and 3(3),
	(b) section 3(7)(a) and Schedule 1 (in so far as they relate to the starting rate), and
	(c) any other provision of this Act the effect of which is to change the bands of income on which income tax is charged.'. [Mr. Philip Hammond.]
	 Brought up, and read the First time.
	 Question put, That the clause be read a Second time:
	 The House proceeded to a Division.

Mr. Deputy Speaker: I ask the Serjeant at Arms to investigate the delay in the No Lobby.

The House having divided: Ayes 220, Noes 304.

Question accordingly negatived.

Clause 3
	  
	Abolition of starting and savings rates and creation of starting rate for savings

Amendment proposed: No. 6, page 2, line 27, at end insert
	'(8) The Chancellor of the Exchequer shall, within six months of the coming into force of this section, lay before the House of Commons a report containing an assessment of the combined impact of
	(a) the increase in personal allowances, and
	(b) the abolition of the starting rate of income tax,
	on individuals with a gross income under 13,000 per annum.'. [Mr. Jeremy Browne.]
	 Question put, That the amendment be made:
	 The House divided: Ayes 161, Noes 307.

Question accordingly negatived.
	 Amendment made: No. 5, page 101, leave out lines 19 and 20 and insert
	'(5) Insert at the end'. [Jane Kennedy.]

New Clause 16
	  
	Set-off etc where right to be paid a sum has been transferred

'(1) This section applies where there has been a transfer from one person (the original creditor) to another person (the current creditor) of a right to be paid a sum (the transferred sum) by the Commissioners.
	(2) The Commissioners
	(a) must set the transferred sum against a sum payable to them by the original creditor if they would have had an obligation to do so under or by virtue of an enactment had the original creditor retained the right, and
	(b) may do so if they would have had a power to do so under or by virtue of an enactment or under a rule of law had the original creditor retained the right.
	(3) Subsection (2) applies whether the sum payable by the original creditor to the Commissioners first became payable before or after the transfer (but not if it only became payable after the Commissioners discharged their obligation to pay the transferred sum to the current creditor).
	(4) The following are discharged to the extent of any set-off under this section
	(a) the obligations of the Commissioners in relation to the current creditor, and
	(b) the obligations of the original creditor.
	(5) An obligation under or by virtue of an enactment (other than this section) to set the transferred sum against a sum payable to the Commissioners by a person other than the original creditor has effect subject to the obligation under subsection (2)(a) and to any exercise of the power under subsection (2)(b).
	(6) A power under or by virtue of an enactment (other than this section) or under a rule of law to set the transferred sum against a sum payable to the Commissioners by a person other than the original creditor has effect subject to the obligation under subsection (2)(a).
	(7) In determining the sum (if any) to be paid, the Commissioners may make any reduction that they could have made if the original creditor had retained the right to be paid the transferred sum (in addition to any other reduction that they are entitled to make), including a reduction arising from any defence to a claim for the sum.
	(8) In this section
	(a) references to the transfer of a right are to its transfer by assignment, assignation or any other means, except that they do not include its transfer by means of a direction under section 429 of ITA 2007 (giving through self-assessment returns),
	(b) references to a sum that is payable by or to a person are to a sum that is to be paid, repaid or credited by or to that person and references to the payment of the sum (however expressed) are to be interpreted accordingly, and
	(c) where a right in relation to a sum has been transferred more than once, references to the original creditor are to the person from whom the right was first transferred (except in subsection (1)).
	(9) Where the right to be paid the transferred sum is dependent on the making of a claim
	(a) subsection (2) does not apply unless a claim in respect of the transferred sum has been made, and
	(b) the references in subsections (2) and (7) to the obligations or powers that the Commissioners would have had if the original creditor had retained the right are references to those that they would have had if the original creditor had also made the claim in respect of the transferred sum.
	(10) This section has effect where the right to be paid the transferred sum was transferred from the original creditor on or after 25 June 2008.'. [Jane Kennedy.]
	 Brought up, and read the First time.

Jane Kennedy: I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker: With this it will be convenient to discuss the following:
	New clause 5 Coming into force of Part 7
	'The provisions contained in Part 7 of this Act shall not come into force until
	(a) the Treasury has prepared and laid before the House of Commons a report setting out the safeguards available to taxpayers and third parties in respect of HMRC's powers contained in Part 7 of this Act; and
	(b) the House of Commons has by resolution approved the report.'.
	New clause 19 Taxpayers' charter
	'(1) The provisions of Part 7 of this Act shall not come into force until the condition set out in subsection (2) has been satisfied.
	(2) The condition referred to in subsection (1) is that the Treasury has, by regulations made by statutory instrument, provided for the introduction, by no later than the passing of the Finance Act 2009, of a Taxpayers' Charter.
	(3) Regulations under subsection (2) must
	(a) specify the statutory rights of the taxpayer, including providing for a right to appeal against an action or decision of HMRC, and
	(b) specify the statutory duties of the taxpayer, including
	(i) notice periods to which the taxpayer must adhere,
	(ii) documents to which the taxpayer must allow access, and
	(iii) penalties which may be levied on the taxpayer for failure to comply.
	(4) Regulations under subsection (2) may not be made unless a draft of the instrument containing them has been laid before and approved by the House of Commons.'.
	Amendment No. 8, in clause 112, page 72, line 36, at end insert
	'(10) This section shall not come into force until
	(a) the Treasury has laid before the House of Commons a review of the ability of HMRC to secure electronic documentation provided by a person to HMRC for the purposes of checking the tax position of that person, and
	(b) the House of Commons has by resolution approved that review.'.
	Government amendments Nos. 24 to 28
	Amendment No. 36, in schedule 36, page 382, line 37, leave out 'solely' and insert 'in whole or in part'.
	Amendment No. 37, page 383, line 23, leave out 'solely' and insert 'in whole or in part'.
	Amendment No. 38, page 383, leave out line 29 and insert
	'(b) if sub-paragraph 2(b) applies or the occupier does not agree a time and sub-paragraph (2) is satisfied, at any reasonable time.'.
	Amendment No. 39, page 383, line 31, leave out '7' and insert '14'.
	Amendment No. 34, page 388, leave out lines 22 to 24.
	Amendment No. 35, page 388, leave out lines 32 to 34.
	Amendment No. 4, in schedule 39, page 413, line 21, leave out paragraph 12.

Jane Kennedy: First, I shall discuss new clauses 5 and 19. New clause 5 is technically deficient. It is not clear how it is intended to work in conjunction with the provisions that are to be brought in by separate order. The intention is to delay the whole of part 7 until the report has been written and endorsed by Parliament, but that does not sit easily across these measures; the same applies to new clause 19.
	I want to say a little about part 7, which contains a number of administrative provisions, the majority of which come from the work of the review of powers, deterrents and safeguards. Other measures in part 7 include clauses relating to appeals, excise matters, funding bonds and measures under the avoidance disclosure rules and others. Those clauses are vital if the HMRC is to deliver the benefits set out in the O'Donnell review, including the closure of the tax gap and the modernisation of existing legislation.
	The importance of adequate safeguards has been recognised by the Government and the HMRC and the valuable views of representative bodies have been taken on board. In Committee, we spent seven hours on schedule 36 alone. I am not complaining about that; it is right that such an amount of time should have been spent on such important legislation. In addition to those safeguards in the primary legislation, further protection will be provided by regulations and guidance. Broadly, that is the main area of disagreement.
	It would be helpful to consider what the legislation actually includes. For compliance checks, schedule 36 alone includes 37 separate and identifiable safeguards. The levels and reductions for penalties for incorrect returns are now set in statute, rather than being in HMRC guidance to be left to the discretion of officers. On resolving disputes, clause 122 will introduce an optional statutory review of HMRC decisions. The amendment would delay that.
	Throughout our debates, the Opposition have repeatedly stated that all safeguards should be in primary legislation. I do not accept that, and I do not believe that the hon. Member for South-West Hertfordshire (Mr. Gauke) would if he were in my position; I hope that he will not be any time soon. Legislation cannot cover every conceivable scenario. Other forms of safeguard can be both flexible and a protection for the taxpayer. In deciding whether the HMRC is acting reasonably in any particular case, the courts will take account of its published guidance.
	As with last year's penalties clauses, there will be full and open consultation on the guidance. That approach was applauded last year. Work on producing guidance on compliance checks in formal disputes resolution, penalties, debt and unpacking containers will be completed well in advance of the legislation's coming into effect. Although it is true that we have not always been persuaded that further safeguards are necessary, additional safeguards were introduced in consultation before the Bill was introduced and in the course of our proceedings. The HMRC has been prepared to forgo certain benefits of alignment when respondents to consultation made a strong case for the retention of safeguards. For instance, we have retained the inquiry window for direct tax self-assessment cases and the evidence-of-facts rule for VAT.
	Following consultation, we also agreed that a penalty on a third party should apply only when that third party deliberately falsified or withheld information from a taxpayer. We removed a proposed penalty for failure to allow entry to premises unless there had been an independent external authorisation. During the parliamentary process itself, the Government have tabled further amendments ensuring that the power of entry and inspection does not extend to any part of premises used solely as a dwelling. Other than in cases involving the taxable supply of goods, we restricted the power to inspect business premises to those used by the person whose liability is being checked. I recognise the concerns that have been expressed about ensuring adequate safeguards, but such safeguards must provide real and effective protection for taxpayers, rather than merely create bureaucracy and delay. The balance is right in part 7.
	As I said, new clause 5 seeks to delay that implementation of part 7 until further reports. What could such reports add to the already extensive consultations and detailed debates in the House? No doubt, the hon. Member for South-West Hertfordshire will make the case in a moment. New clause 19 seeks to delay the implementation of part 7 until regulations containing a taxpayers charter have been approved by the House of Commons. Acceptance of that new clause would result in the additional safeguards in part 7 being delayed for another yeara somewhat perverse outcome, given the importance attached to safeguards.
	As the House will know, we are considering the introduction of a charter, which should bring many positive benefits, especially in improving the relationship between the HMRC, taxpayers and other customers. I want to put on record my gratitude to the representative bodies for the interest that they have shown in the subject, and particularly to the Chartered Institute of Taxation for the paper that it published in March.
	The consultation published on 19 June makes things clear. The terms of a charter should not be set out in legislation. That is not to devalue the charter, which is an important standard. Many taxpayers' rights are set out in tax legislationfor instance, the right to appeal against certain HMRC decisions. Others, however, are provided through non-statutory routes such as codes of practice and departmental practice. In addition, an array of non-tax legislationthe Human Rights Act 1998, data protection legislation, the Freedom of Information Act 2000 and the likealso governs the HMRC's relationship with taxpayers and claimants. A charter is intended to support that. The wording of an accessible and useful charter is not intended to be like that of legislation; it is meant to be a guide to the law. The use of statutory wording in a charter would compromise the intention to create a simple statement of the basic rights of taxpayers and other customers in their relationship with the HMRC.
	This is a large group of amendments, and I shall try to address quickly each of them in turn. Clause 112 forms part of a package of measures allowing the HMRC to check that taxpayers have met their obligation to pay, return and claim the correct amounts of tax. That package includes the power to require the production of documents and the power to inspect them. In essence, the clause reproduces the equivalent provisions from the former Inland Revenue and Customs and Excise. The clause consolidates the provisions that ensure that documents include electronic versions and allow HMRC officers access to computers holding information required for a tax check. The new provision also aligns and decriminalises the penalties that apply when a person obstructs an inspection of computer records or fails to provide reasonable assistance.
	Amendment No. 8 would not have any impact on the HMRC's ability to carry out checks on electronically held records. The existing provisions would continue in force until superseded by clause 112, but the amendment would leave in place the current unsatisfactory situation whereby a person could face a criminal charge for obstructing the exercise of the power or for failing to offer reasonable assistance under one provision, and a financial penalty under the other provision. I believe that it is better to align those now.
	The reports by Kieron Poynter and the Independent Police Complaints Commission following the loss of discs containing child benefit data have recently been published. Both reports make it clear that the HMRC did not give data security the priority and attention that it should have done. Those are strong criticisms that the department has taken on board. I am grateful to the IPCC and to Kieron Poynter for their thorough reports, and I fully accept all their recommendations. HMRC has already made progress on 39 of the 45 recommendations and has implemented 13 of them. The powers in clause 112 already exist and would continue to operate regardless of amendment No. 8. It would be unnecessary for another report to be undertaken by HM Treasury. What is needed is work to ensure that data security is a top priority, and the Poynter review acknowledges that that is already well under way. The amendment is therefore superfluous.
	Amendments Nos. 34 and 35 concern provisions for taxpayers and third parties to appeal against notices to see statutory records. The Bill already introduces a right of appeal against requests for supplementary information. That is new, as current legislation provides only a right of appeal against information requests made as part of a self-assessment inquiry. However, since taxpayers are required by law to keep certain records, it should not be onerous for them to provide them. A right of appeal would not be appropriate or effective. It is difficult to see what grounds for appeal would succeed. What is more, sadly, evidence from income tax self-assessment suggests that where such a right of appeal exists some non-compliant taxpayers exploit it by routinely appealing against all notices for even the most basic information so as to delay the proceedings.
	As I said, safeguards need to be effective. The power to require statutory records must be exercised for the purpose of checking a tax position and must be exercised reasonably. Those are better safeguards. I can understand the concerns, but the amendments would not achieve the protection hoped for and could do the opposite. I hope that they are not pressed to a Division. As I have said repeatedly in considering the HMRC's powers, I will keep this matter under close review to ensure that the new powers and the proposals in the Bill work in the way that is intended.
	Amendments Nos. 36 and 37 seek to prevent the HMRC from ever visiting or inspecting records at a taxpayer's home. The legislation currently prevents officers from visiting premises used solely as a home. The motives behind the amendments are wholly understandable but they fail to recognise the complexity of people's affairs in the 21st century. The amendments would prevent visits to, for exampleI am not singling these groups out for any particular reasondentists, doctors, hairdressers or carpenters. Hairdressers seem to feature in our discussions. I could go on, but I will not. I am talking about those who, for example, use one room in their house as a surgery, salon or workshop. The amendments could also affect the ability to inspect pubs, corner shops and other premises where the taxpayer lives on those premises. They would affect unacceptably the HMRC's ability to carry out its duty of checking that the right tax has been paid at the right time by all businesses.
	The problem of distinguishing between business premises and homes is not unique. It is faced by the rating authoritieswe discussed whether their definitions could be usedby planning offices and by local authorities. In each situation, the detail of what is considered to be business premises is set out in guidance. HMRC has agreed that guidance is needed to set out the circumstances in which it is acceptable to visit a home used for business purposes. Assurances have already been given in Committee that that guidance will be written in consultation with representative bodies. Assurances have also been given that the homes of home workers and those occasionally working from home will not be treated as business premises.
	Amendment No. 38 appears to be attempting to restrict the times when the HMRC can specify the time and place of a visit to situations where the taxpayer does not agree a time and place. It is not clear that the amendment would work. If it did, it would apparently prevent HMRC officers from making a visit if the occupier agreed to a visit two years' hence. I will wait to hear about the detail of that proposal. Amendment No. 39 is a replica of an amendment that we discussed in Committee.
	Amendment No. 4 seeks to retain the general time limit for taxpayers' income tax claims at five years and 10 months. However, that would make it out of step with assessment time limits and with other claim time limits, which we are aligning at four years across taxes. We made progress on time limits in Committee, so I will not labour the points again. The new framework continues to deliver parity between taxpayers and the HMRC. Where tax has been underpaid as a result of a mistake, the HMRC will be able to assess that only within the new four-year period. Similarly, a taxpayer will be able to make a claim within four years. None the less, HMRC will still accept later claims where the taxpayer has a reasonable excuse, including where an error on the HMRC's part has led to the claim being made outside the time allowed or where a taxpayer has given clear notice of his or her intention to claim before the time limit expires.
	The HMRC and I recognise that pensioners and those on low incomes have very particular needs. The HMRC is working to understand them and to find ways to overcome barriers and raise awareness about the need for formal claims. The HMRC will work with taxpayer representatives, including the Low Incomes Tax Reform Group, to identify which groups of people are likely to be able to make claims, and the HMRC's publicity will target those groups to inform them of their rights to make claims and of the time limits. I have said it before in Committee and say it again today: I will keep the effectiveness of the HMRC's publicity and the planned PAYE system improvements under review to ensure that people are prepared for the new time limits from 1 April 2010.
	I will pause at this point, as before I turn to some of the other issues, it might be helpful to hear what the hon. Member for South-West Hertfordshire has to say.

David Gauke: It is a pleasure to return to the issue of powers. As the Financial Secretary said, we debated the matter at some length in Committee. The time we spent was valuable, although I had not realised that we spent seven hours on schedule 36 alone. I suspect that I may have been responsible for quite a chunk of that time, but I do not think that I will be addressing the House at anything like that length this evening.
	The debate that we had in Committee was important. The Government's consultation and the proposals in the Bill provoked a considerable response, and there was a great deal of public interest. The professional bodies looked very closely at what the Minister said, in particular, to seek reassurance and a further understanding of what the measures involved. The debate was therefore a valuable and useful part of the Bill's passage; in many respects, the process worked as it should have done. I compliment the Financial Secretary on the way she has addressed this matter, attempting to deal with the issues in a constructive manner.
	There are times in the course of all debates, including on this Finance Bill, which is no exception, when the Opposition wish to highlighttake pleasure in would be the wrong way of putting itthe fact that a Government have moved their position. We make accusations of U-turns, fiascos and humiliationsand rightly so with regard to some of the matters that we have debated today. However, on the subject of our discussion, the Government have moved for the best of reasons. There has been an intention to listen to the concerns of professional bodies and an attempt to allay them. We wish that the Government had gone further in some instances, which we shall discuss this evening, but I want to put it on record that the Government's approach has been sensible. Equally, I hope that the Financial Secretary agrees that our approach has been one of constructive opposition in trying to scrutinise the Government's actions and highlighting where we think they are wrong, but trying together to move the law in the right direction.
	The principal concern that the professional bodies raised is, at heart, simple. By and large, there is no objection to greater harmonisation of powers for different types of taxes. There are sometimes one-size-fits-all problems, but by and large, some harmonisation is recognised as beneficial. However, there is concern about balance regarding HMRC's powers and deterrents. They are mostly increasing and are perhaps advancing faster than the safeguards. What HMRC requires to collect tax efficiently and enforce tax law, and the safeguards for protecting the taxpayer, are out of sync to some extent. That point is at the heart of the concern expressed by the professional bodies, and we raised it on numerous occasions in Committee.
	Movement has occurred and the Government have taken a constructive approach. There has been movement on notice before inspections of businesses and on inspections of third party premises. The Financial Secretary made some helpful comments and provided clarification on issues such as set-off involving tax credits. An Opposition amendment was even accepted; it dealt with the length of time after which HMRC may serve an information notice on a deceased person's tax position. We are grateful to the Financial Secretary for agreeing to the amendment on the basis that it was common senseas she said, it was a good amendment. That is not to say that there were not many other good amendments, which were not accepted, but we take what we can.
	The Government have also promised to keep matters under reviewthe provisions on powers, and especially the culture change in HMRC with regard to customer service and improving the taxpayer's experience. Other specific issues to be kept under review include professional privilege, the meaning of reasonable excuse in the context of penalties and, as the Financial Secretary mentioned this evening, publicity for tax reclaims. That is important.
	However, we have also heard a great dealwe heard it again tonightabout the way in which many issues that we have raised will be addressed in guidance. The Financial Secretary said that we argued that everything needed to be in primary legislation. Yes, we argued that more than we currently have should be in primary legislation. Oppositions tend to argue that regulations should be made by the affirmative rather than the negative procedure, although there were circumstances in which we did not adopt that position.
	There are times when it is appropriate for HMRC to use guidance because it gives greater flexibility, which can be necessary. Guidance will be used for a list of matters. However, the thinking behind new clause 5 is that we could not examine the guidance or make an informed decision about whether the balance that I considered a moment or two ago was being struck. We have to take it on trust that, when the guidance is produced, following consultation with professional bodies and so on, that balance has been achieved.
	Let me briefly consider some of the issues with which guidance will dealthe Financial Secretary also mentioned some. Sometimes there will be clear-cut cases of what constitutes a business premises and what constitutes a private home, but at other times, they will be borderline. Guidance will provide the answer to that and to what constitutes a business activity. It will also cover the information that should be provided to the taxpayer when HMRC visits a premises. There will be a code for unannounced visits and greater detail about what constitutes statutory records. There is also the tribunal system. The Financial Secretary said that the Ministry of Justice was examining that matter and that a Finance Bill could not tackle it. We considered reporting scheme reference numbers and HMRC's disclosure rules. There is also HMRC's policy on set-off.
	One could take each item and present an argument about whether it should be dealt with in primary legislation, regulation or guidance. It is not my purpose to pursue those arguments, but to emphasise that, even if we accept the Government's case that those matters should be tackled through guidance, Parliament is considering the subject without full knowledge of that guidance. The Government have worked constructively, but to some extent they have done that because of our parliamentary proceedings, which focus the mind of Ministers, their advisers, professional groups, the Opposition and Parliament as a whole. Parliamentary involvement means that we do not simply drift into accepting a set of provisions that do not entirely satisfy the wider business community, taxpayers and so on.
	I said at the outset that the process of considering the Finance Bill had been valuable and useful for the provisions on HMRC powers. Ministers have been forced to examine those powers closely and defend them. Doubtless, the Financial Secretary has questioned officials and forced them to justify the provisions. That is healthy. New clause 5 would grant an opportunityperhaps not on the same scale as the Finance Bill; we had a good four or five sessions on the powersfor Parliament to revisit part 7 and all the various disparate issues that I have mentioned before it comes into force.
	At that point, the Treasury would have to prepare and lay before the House of Commons a report setting out the safeguards available to the taxpayer and third parties in respect of HMRC powers in part 7. The Financial Secretary will then have to sit down with officials and see whether the balance has been achieved and whether the guidance provides the proper protection, knowing that she will have to appear before members of a committee who will not only question and scrutinise, but receive support and guidance from professional bodies. Again, I appreciate that that would be hard work for busy Ministers and also for Opposition spokesmen, but it would be a useful exercise ensuring that when we come to the end of the process, the warm words, and the undertakings that we have heard from the Financial Secretary, which I do not doubt for a moment, are delivered in practice. That is the thinking behind new clause 5. We find that a persuasive argument, and I should like to give notice that we intend to press new clause 5 to a vote.
	Briefly, new clause 19 deals with the taxpayers' charter, which is advocated by the hon. Member for Taunton (Mr. Browne), who will no doubt speak on the matter. I do not wish to spend a great deal of time on it, but it would be fair to say that the thinking behind new clause 19 is similar to the thinking behind new clause 5, so obviously we have a great deal of sympathy for it.
	Let me turn to our amendments, to which the Minister referred. Amendments Nos. 34 and 35 relate to the right to appeal against taxpayer notices. Paragraph 29 of schedule 36 gives taxpayers and third parties a right of appeal to the first-tier tribunal against an information notice or third party notice. However, there is no right of appeal if the notice relates to a taxpayer's statutory records. The Financial Secretary made the point that given that there are circumstances in which businesses are required to keep records, they should therefore have to disclose them. That is a fair point, but our concernthe Institute of Chartered Accountants has highlighted this, toois that there is sometimes a grey area between business records and personal records.
	In our debate in the Public Bill Committee, the Financial Secretary referred to a hairdresser's appointment diaryas she said, many of her analogies and examples involved hairdressersand that was helpful. A hairdresser's appointment diary is clearly a business record. That is not in dispute. However, many people will keep a diary that contains some business-related entries, but a majority of personal entries. They may take a different view from an HMRC official on that personal diary, which by its nature will contain personal information that an individual would, for whatever reason, not want to fall into the hands of a third party.
	What is that taxpayer to do? They have no ability under the Bill as drafted to appeal to a third party when there is a disagreement. The purpose behind amendments Nos. 34 and 35 is to address that issue. One way of dealing with the problem that would address my concerns, and perhaps those of the Financial Secretary, too, would be to give a right of appeal purely on the basis of whether the document in question is a statutory record. The Financial Secretary said that there was a danger of delays and that people might use an appeal mechanism to delay unduly the progress of an HMRC inquiry. However, we should remember that the tribunal will have the power to impose costs in the event of determining that any such delay is vexatious. I therefore question whether the Financial Secretary's argument is necessarily that persuasive.
	Amendments Nos. 36 and 37 relate to paragraph 10 of schedule 36, which deals with the power to inspect business premises. The issue here is whether the premises are used solely as a dwelling, in which case the powers are not applicable, or whether, as we argued in Committee, the provisions could be broadened to include premises that are used in whole or in part as a dwelling. In Committee, the hon. Member for Dundee, East (Stewart Hosie)he is here now, so perhaps he will speak on this pointprovided the useful example of a musician taking a booking. When a musician takes a booking, they will not have one room in the premises that is used for business purposes, to which HMRC could have access, thus leaving the rest of the housethe private dwellinguntouched. Rather, it is likely that a phone call would be received in a living room, the study or a bedroom, which would therefore be being used, at least in part, for business purposes.
	There is clearly some sensitivity to the issue, which the Government recognise, because they already accept that paragraph 10 of schedule 36 should not apply to premises that are used solely as a dwelling. There is clearly agreement on that. However, the exemption in paragraph 10 would appear to be largely ineffective for those peopleI suspect that this is a large number of people, not just musicianswho do some work from home, such as making phone calls or working on a computer. With regard to those circumstances, that sensitivity, which the Government accept in paragraph 10, does not appear to have been addressed. I would therefore be grateful if the Financial Secretary addressed that concern. If there is some sensitivity towards dwellings, what is the reason for it; and, given that explanation, how does she justify the narrow exemption in paragraph 10?
	Let me turn to amendments Nos. 38 and 39. As the Bill is drafted, where HMRC wishes to inspect a premises, it must either agree a time with the occupier, give at least seven days' noticeI acknowledge the fact that the Government moved from 24 hours' notice, which we welcomeor be authorised by an authorised officer. That third leg is important and relates to combating fraud, although that is not the concern in this context. Amendment No. 38 would mean that the notice period would be triggered only if the officer had sought to reach an agreement with the taxpayer. The concern, which has also been raised by the Institute of Chartered Accountants, is that although there is provision that there should be agreementthe Financial Secretary said in the Public Bill Committee that she anticipates that, as a rule, HMRC will seek to reach an agreement with the taxpayerthat could, strictly speaking, simply be ignored by HMRC. HMRC could immediately start counting down the clock towards the seven days' notice without having first attempted to reach an agreement. Amendment No. 38 attempts to address that problem.
	I have some sympathy with the Minister's view that the amendment's drafting is not as clear as it might be, but its intention is to ensure that the first step is the reaching of an agreement. If that cannot be achieved, the clock will start ticking towards seven days or, as we argue in amendment No. 39, towards 14 days. In Committee, we debated how many days it should be, but there was an element of how long is a piece of string? to our discussions.
	The reason behind our proposing 14 days is that people often go on holiday for up to a fortnight, and they should not have to come back to find HMRC on their doorstep. Fourteen days is therefore more reasonable. We are not talking about combating fraud or about the equivalent of a dawn raid. I recognise that there are times when HMRC needs the power to move quickly and to surprise a taxpayer whom it suspects of fraud, but we are not talking about those circumstances here. I therefore believe that 14 daysas opposed to seven daysis entirely reasonable.
	Before I deal with amendment No. 4, I should like to say a few words about Government new clause 16 and its consequential amendments. We do not have any particular problems with the new clause, although we wonder why we are getting a new clause at this stage. To be fair, however, the explanatory notes state that this is as a consequence of the Commissioners of Revenue and Customs  v. Midlands Co-operative Society case, which was determined in April. The case related to the right to make a claim for overpaid VAT being capable of being transferred from one person to another, and to how set-off could be avoided in such circumstances. I would be grateful if the Minister told us what financial risk might be at stake in those circumstances, although she might not have the figures to hand. I do not know what scale is applied in claims for overpaid VAT, or other taxes, where an amount is set off, but presumably that is the amount that could be at risk. If she enlightened the House on that point, I would be grateful.
	Theoretically, the transferee of a VAT claim could be entirely innocent. In the circumstances envisaged in new clause 16, the set-off could be made against the transferee as though it were against the transferor. However, what remedy would be available to a transferee who had acquired a VAT claim in all innocence? Those circumstances might be unlikely, but I would like to know whether a motive test, which often is incorporated into measures to tackle avoidance, was considered.
	I must reiterate some of the concerns about the set-off provisions. We have expressed our concern that set-off might occur when it is not in the best interests of taxpayers, and that perhaps it should be achieved only with the agreement of taxpayers. In particular, we have asked what would happen in an ongoing dispute between HMRC and a taxpayer and HMRC sought to make use of its powers on set-off. There are further issues relating to set-off, and although we have no specific objections to the new clause, we have one or two queries.
	Amendment No. 4 deals with reclaiming overpaid tax, which we debated in Committeealbeit fairly briefly, given the nature of the issue. The Low Incomes Tax Reform GroupLITRGhas been active in this regard, and I was pleased to hear the Minister say that she is working with the group to address the matter. Paragraph 12 of schedule 39 will reduce the time limit for reclaiming overpaid tax from five years and 10 months to four years. Many people on low incomes, especially pensioners, overpay tax and are not aware of their right to reclaim it. LITRG has highlighted three situations in which this tends to happen. The first is when tax is deducted at source from bank or building society interest at a higher rate than that at which the depositor is liable. The second is when older people are not given the right age-related allowanceswe have heard plenty of anecdotal evidence about thatand the third involves incorrect PAYE codes being given to people with multiple income sources, such as more than one pension.
	LITRG has criticised HMRC's efforts to highlight the issue of overpaid tax. It has been particularly critical of the fact that the number of leaflets and other paper products produced by HMRC has diminished over the years, and of the fact that there has never been a take-up campaign for the blind person's allowance. Many people assume that one has to be blind to claim it, but that is not the case. The group also says that these matters could be resolved if HMRC carried out regular matching of PAYE records and established an annual routine of contacting all those whom it had identified as due for a repayment.
	This is an important issue. The organisation Tax Help for Older People has conducted a survey of recent claims for back tax. It found that 44 per cent. of low-income pensioners who had had tax repayments had been entitled for six years or more. The Bill states that the rights of those low-income pensioners would be reduced, and that they would be able to claim only for four years.
	In Committee, I referred to the pensioner tax-back project, which, in 2005, repaid 50,000 pensioners some 20 million. It is interesting to note the comment by Robin Williamson of LITRG. In an e-mail to me, he described that as being merely the tip of an iceberg. In Committee, the Government's position was that there would be a one-way flow if we changed the arrangement, and that the period allowed for reclaiming tax would be greater than the period available to HMRC for assessment. It was stated that there was a need for symmetry. Previously, there was symmetry in relation to the period of five years and 10 months, or of six years, and that has been reduced.
	Taxpayers cannot be expected to possess the same knowledge of their tax position as a trained Revenue officer. There is an imbalance between the knowledge and expertise of HMRC and some taxpayers, particularly the low paid and the elderly. That problem might persist and even intensify, given that the 10p savings rate will continue although the 10p income tax rate has been abolished. We will therefore press amendment No. 4 to a Division.
	We have had constructive debates, but the point remains that the balance may not be quite right. We seek further reassurance from the Ministerwe have already received much reassurance from herparticularly on the specific issue of tax reclaims for the low paid. We also seek to provide Parliament with an opportunity to debate these issues once it has had the benefit of seeing the guidance and of assessing how the promised change in HMRC culture has worked. If we do that, we will have a regime that will stand the test of time and this fundamental reform of HMRC's powers will be a success.

Jeremy Browne: In the previous debate I was inaccurately accused of taking insufficient interest in the details of the Bill. Here I am now, but my detractors have left to discuss other matters elsewhere, which I regret. Although this does not at first sight appear to be a box office string of amendments, it is quite significant as it deals with the balance between the powers of the state and the liberties of the individual citizen.
	PricewaterhouseCoopers, which obviously follows these matters closely, has described the proposals that we seek to amend this evening as
	the most fundamental changes to HMRC's ability to inquire into direct tax returns since 1976.
	A series of different Acts, including the Taxes Management Act 1970the year in which I was bornand the Finance Act 1998 has been scrapped and a new framework for governing the practices of Her Majesty's Revenue and Customs, augmented by further published guidance, has been put in its place.
	Members of all parties would recognise that HMRC has an important job to perform. It has a duty to collect on behalf of the Government the taxes that this Parliament has decided to levy on the people of this country. We would not, of course, enjoy the public services and other aspects of public expenditure if that task were not performed collectively on behalf of us all, so I am not in the business of running down HMRC. It has an important job to do; nobody likes paying taxes, but I observe that nobody likes the withdrawal of the public spending consequences either. We thus owe a debt to HMRC for undertaking what is not always the most popular work on our behalf.
	There will be occasions when HMRC detects behaviour that is either consciously fraudulent or, in some cases, not fraudulent but where the individual is not paying a level of tax that is deemed, on further inspection, to be appropriate and necessary. Up to a point, HMRC needs powers to probe the private affairs of individual citizens, but legitimate concerns have been expressed by many representative bodies that those powers have become excessive. HMRC's website claims that
	the Review of Powers is committed to consulting widely at each stage in the development of policy and legislation,
	but many feel that the Government have ignored wider stakeholder reservations about the Bill.
	I made the point in Committee that the consultation period ended on 6 March, but the details of the proposed changes were announced in the Budget of 12 March. Although I have never worked in the Treasury, I suspect that many of these matters were decided not in the final few days, but many weeks earlier. A number of professional bodies share my suspicion that many of their representations were overtaken by the considerations and deliberations of the Treasury and that the consultation process was not as comprehensive or as listening as it might have been.
	The Liberal Democrats have tabled new clause 19 and amendment No. 8, which I propose to discuss in reverse order. I said during the debate on the previous group of amendments that when the history of this Prime Minister's time in office comes to be written, the feature of his premiership that will attract the greatest degree of criticism will probably be the doubling of the 10p tax rate and the wrath that it incurred among the electorate. Another contender for the moment that inflicted the greatest damage to the Prime Minister's reputation, however, is an action that was not specifically within his control but that summed up for many people the accident-prone nature of his premiershipthe loss of data on 25 million of our citizens when two tax discs went missing.
	It is important that we recognise the seriousness with which our fellow citizens take the need to protect their individual data and private information. As with medical recordsand, of course, the Government are enthusiastic about introducing ID cardsmore and more of our individual data, which can be sensitive and private, are stored electronically and centrally. If we think back to 10 or 20 years ago, it would have been difficult to distribute personal data about 25 million peopleeven if one sought to do sowithout lorry loads of couriers to take the information to the required destination. Nowadays, all that can be sent on CDs or at the press of a computer button. Understandably, people have come to rely on the efficiency of data transfer, which is also hugely important in any modern economy, but, at the same time, people are concerned about how good the safeguards are to protect their confidential affairs.
	Amendment No. 8 would prevent clause 112 from coming into force until
	a review of the ability of HMRC to secure electronic documentation
	had been undertaken and approved by the House. I appreciate that the Government are already trying to make progress in that regard, that the Chancellor has come before the House to make statements and that other Treasury Ministers have spoken, so all parties recognise that the subject is serious. The amendment would, however, give a firmer and more formal standing to that process and allow the elected Chamber of the UK to debate, discuss and, ultimately, approve the actions taken by the Government to make improvements.
	New clause 19 is probably more significant, as it is designed to put a charter into law. Of course, charters were very fashionable in the 1990s; I remember them covering all sorts of areas, some more important than others. This provision is a bit of a return to those days, when the Government were crumbling and defeat looked inevitable. The charter under discussion seeks to ensure that the rights of the individual citizen are protected when they are dealing with HMRC.

Jane Kennedy: Before the hon. Gentleman is too quick to dismiss the concept of a taxpayer's charter, will he concede that the OECD recommends such a course of action, and that many other developed economies have done exactly that? As I have suggested, such a charter provides for an improvement in the relationship between the taxed and the tax authorities.

Jeremy Browne: I concede that, and the Government have on occasions been slightly unfairly maligned. A reasonable person trying to be as impartial as possible would say that part of the blame for some of the problems that HMRC has had could reasonably be attached to the Government because they sought to reorder and restructure the organisation. If one undertakes an organisational restructuring, one must live with the consequences of problems or inefficiencies that arise partly as a result of that restructuring.
	That said, were the Government of this country run by another political party, would such problems disappear overnight? No, it is reasonable to say that they would not. Such problems will inevitably arise in private and public sector organisations, because that is the nature of human error and of the new electronic age in which we live. The only thing we can do is to ensure that the safeguards are constantly reviewed and improved, and I appreciate that the Government are trying to do thatit would be odd if they were not. We encourage the Government to do even better in that regard.
	On the balance between the powers of the Revenue and the individual taxpayer, it would be helpful to clarify and formalise the specific powers of HMRC, which new clause 19 seeks to do. It is not a one-way streetit would be helpful for employees of that organisation to know in greater detail and with greater clarity what they are allowed to do. I and the hon. Members for South-West Hertfordshire (Mr. Gauke) and for Dundee, East (Stewart Hosie) raised hypothetical examples in Committee, and there are and always will be grey areasprobably even more than in the past, because people's tendency to work from home, internet cafs or whatever will mean less distinction between the place of work and place of residence than even five years ago. A proper charter that explains what HMRC is able to do would therefore be helpful.
	Basic rights of appeal for individual citizens against the actions or decisions of HMRC would also be helpful, in which respect the charter would more closely resemble the citizens charters of the 1990s. Many people who understand that HMRC has a job to do, and that a tax inspection regime must be in place, nevertheless feel that they are interfacing with an organisation that is sometimes heavy-handed and unsympathetic to what they regard as legitimate reasons that their tax was not paid precisely as HMRC had decreed. Those people feel that they have little right of appeal or recourse to rectify that perceived wrong. New clause 19 would therefore balance more formally the powers of the statewhich we recognise must exist in the field that we are discussingwith the liberties of the individual citizen. It should not be assumed that HMRC's powers are always superior to those of the individual citizen. Taxpayers have rights just as tax collectors do.
	We look forward to the Financial Secretary's closing remarks, but we wish to press new clause 19 to a vote at the appropriate moment.

Brooks Newmark: I had not intended to contribute to the debate, but I was so moved by the words of my hon. Friend the Member for South-West Hertfordshire (Mr. Gauke) that I am compelled to speak, albeit briefly, on amendment No. 4. I am in constant touch with members of the Braintree Pensioners Action Group, and I feel that pensioners, people on low incomes and people with disabilities might still be hurt by the apparent direction of the Government.
	We have heard that the entitlement period for those trying to reclaim overpaid tax will be reduced from five years 10 months to four years. We know of the efficiency, rigour and zeal with which HMRC seems to go about collecting tax. Unfortunately, on the other side of the equation, the elderly, those on low incomes, and those with disabilities are perhaps not as efficient in understanding how, when and the means by which they can reclaim their overpaid tax. As we have heard from my hon. Friend, they might not even be aware that they have overpaid.
	In that spirit, I have three questions for the Minister. First, what is motivating the Government to reduce the period that some of the most vulnerable people in our society have to reclaim overpaid tax? Secondly, what discussions has she had with the Low Incomes Tax Reform Group on the issue? I am sure that she has had many such discussions, because that group has clear concerns about the direction of the Government and HMRC. Thirdly, having listened to pensioners, the elderly, those on low incomes and particularly representative groups such as the Low Incomes Tax Reform Group, what protections do the Government seek to put in place for those who might be hurt by that general direction?

Stewart Hosie: I want to address new clause 5, but in doing so return to the debate that we had in Committee on clause 112 on computer records.
	The Financial Secretary will recall the argument: clause 112 requires the taxpayer to allow HMRC, a commissioner or an officer to
	inspect a document, or to make or take copies of or extracts from or remove a document.
	We were talking about computer records, so I gave the example of an e-mail, attachment or web page on a server hosted outwith the country. I also made the point that clause 112 allowed an authorised person to have access to
	any person having charge of, or otherwise concerned with the operation of, the computer.
	That could be a third party, a maintenance company, someone with a management contract, or a computer that was not under any circumstances in the control of the taxpayer whose documents the Revenue was trying to see.
	The Financial Secretary gave us some comfort at that time, particularly in relation to the extraterritoriality potential in clause 112. However, it is in part 7, as is the introduction of schedule 36 penalties, including paragraphs 43 to 47 and 50, which include the concealment or destruction of documents, failure to comply with time limits, and the tax penalty if a failure or breach continues after an initial penalty has been levied. I am sure that it is not the intention of the Bill or the Revenue, but given the debate on clause 112 in Committee, it strikes me that a penalty under schedule 36 could be levied for concealment, breach of time limits or a tax penalty thereafter, for non-compliance with an order to allow a document to be copied, extracted or removed from a computer wholly under the control of a third party, and not under the control in any way, shape or form of the taxpayer. What attracts me to new clause 5 is the reference to safeguards applying to taxpayers who might find themselves in the hideous position of wanting to comply but being technically unable to do so.
	I look forward to what the Minister has to say about clause 112, computer records, how breaches could be penalised under schedule 36, and what safeguards might exist in the absence of new clause 5 to prevent or insure taxpayers from being penalised if they had no control over a document that the Revenue was trying to get at or to copy.

Jane Kennedy: I shall deal with the Government's new clauses on set-off provisions before returning to the points made by the hon. Member for Dundee, East (Stewart Hosie) and others.
	As the House was told by the hon. Member for South-West Hertfordshire (Mr. Gauke) and as the explanatory note makes clear, new clause 16 is required as a result of a recent judgment by the Court of Appeal to protect the Exchequer from potential avoidance opportunities, and to ensure that tax is collected as Parliament intended. The hon. Gentleman asked me about the cost to the Exchequer. I approach the answer with some caution. It is extremely difficult to say how much would be lost if the Exchequer were to lose its powers and duties to set off outstanding liabilities against claims for overpaid tax, but it is clear from the value of claims currently lodged with HMRC that the revenue potentially at risk runs into hundreds of millions of poundsless than 500 million, but nevertheless representing a considerable range. I do not wish to be drawn into too much detail, but there is a significant risk.
	Until the Court of Appeal judgment, HMRC had taken the view that only the person who overpaid the tax was entitled to make a claim for repayment. When a person makes a claim for over-declared VAT, HMRC is required to set off against it any outstanding liabilities of the claimant. For example, when a taxpayer submits a claim for 10,000 but has a VAT debt on file of 3,000, his eventual refund will be 7,000.
	The judgment of the Court of Appeal in the case mentioned by the hon. Gentleman, Commissioners for Revenue and Customs  v. Midlands Co-operative Society, makes it clear that the right to make a claim can be transferred by the person who overpaid the tax, namelythis is where it becomes horribly legally complicatedthe original creditor, to another person, the current creditor, who then becomes entitled to make the claim to HMRC for repayment of the tax. The potential loss of tax arises because there is no provision under current law for HMRC to offset the liabilities of the original creditor when the claim for the overpaid tax is made by someone else. As a consequence, taxpayers can, through assignment of the right to make a claim, avoid the set-off procedure.
	New clause 16 seeks to address that avoidance opportunity by putting the current creditor in the shoes of the original creditor for the purposes of the setting off of liabilities. That is about as far as I, a non-legal person, can follow the details, but it is important to ensure that when a person who has overpaid his tax liabilitythe original creditortransfers the right to claim that overpaid tax to another personthe current creditorthe current creditor will not receive from HMRC any more than the original creditor would have received had he made the claim himself.
	Although the Midlands judgment was a VAT case, its application is not limited to VAT. As the current procedure for claiming overpaid VAT is replicated for all the indirect taxes administered by HMRC, the potential for avoidance and loss to the Exchequer exists for them all. HMRC believes that it may also exist in relation to claims for error or mistake relief in direct tax. I stress that the new clause does not empower HMRC to make the current creditor liable for the debts of the original creditor. It simply ensures that the current creditor cannot receive any more tax from HMRC than the original creditor would have been entitled to.
	It is not my intention that HMRC should rely solely on the new clause to recover the original creditor's liabilities. When the right to claim a repayment from HMRC is transferred, the set-off mechanisms in the new clause will not be applied to a payment to the current creditor until HMRC has taken all reasonable steps to recover any outstanding liabilities from the original creditor.
	Amendments Nos. 24 to 28 make consequential changes to clauses 128 and 129. I am grateful to officials for their advice. This is one of those moments that occurred relatively seldom in Committee. I send my best wishes to the leader of an exemplary team of officials, and wish him many happy returns of the day on his 31st birthday. I am sure that he is enjoying spending it in our company this evening.
	The hon. Member for South-West Hertfordshire asked whether a motive test had been considered. The simple answer is no. The purpose of the new clause is not to prevent assignments that are genuinely commercial arrangements, or to make them impractical. It simply ensures that the Exchequer does not pay out any more than it would have had the claim been made by the original creditor.
	The hon. Gentleman spoke of what he perceived as the danger of erring too far on one side of the balance between powers and safeguards. The package provides greater consistency across taxes: although there are some extensions of powers, they are matched by tightening in other areas and a strengthening of safeguards. Inevitably there will be tensions as we seek to ensure that HMRC has appropriate powers to work effectively, and that taxpayers have strong safeguards. The balance has changed, but in my opinion it has changed in favour of the taxpayer. The schedule contains 37 statutory safeguards to protect the taxpayer, at the heart of which is the need for all actions carried out by HMRC to be reasonable. We debated that at length in Committee.
	The hon. Gentleman made a valid point about the protections for ordinary, decent taxpayers who might otherwise be badly affected. As I have said repeatedly, if there is any evidence that the changes work detrimentally in the way that he described, I shall wish to act to address that. At the heart of all our proposed changes is the need for HMRC's actions to be reasonable. Guidance will support the safeguards, and will seek to ensure that taxpayers are fully aware of their rights.
	The hon. Member for Taunton (Mr. Browne) said that he would press new clause 19 to a vote. In my opening remarks, I explained at length the interest in the taxpayers' charter, and I want to present proposals in due course. As the hon. Gentleman knows, we are in the early stages of consultation, and I prefer that approach to the one suggested in his new clause. The review of powers aims to include more safeguards in legislation where appropriate, and, as I have said, additional safeguards are set out in codes of practice and operational guidance.
	The hon. Member for South-West Hertfordshire asked how we could be sure that we would have a chance to scrutinise the guidance. HMRC set out the guidance in a timetable in the consultation response document that was issued at the end of March. The codes of practice and the examples were also published in both consultation documents, providing much of the detail needed, and full draft guidance on record-keeping has been published. All those documents are public and can be scrutinised in Parliament in the normal way, although obviously not by means of a legislative process.
	The hon. Gentleman suggested that taxpayers were not clear about what records to keep. Taxpayers have said that they do not want HMRC to be too prescriptive. Its largely generic approach requires records to be kept of income, sales and expenses, but it also allows taxpayers to decide exactly what they need to keep. They are best placed to decide, bearing in mind their own circumstances. What is important is for taxpayers to keep enough records to be able to make accurate tax returns or claims.
	The hon. Gentleman asked what would happen in the event of a dispute. When there is a dispute, the taxpayer can tell HMRC, and when there is genuine doubt, HMRC will use the written information power that we discussed in Committee. That power would carry a right of appeal in most cases, or it would have to be pre-authorised by an independent tribunal.
	The hon. Gentleman asked why there is no right of appeal against the power to inspect premises. The law says an inspection must be reasonable, and guidance will set out examples of specific cases where an inspection would, or would not, be reasonable. If HMRC breaches that guidance, the taxpayer could either make a formal complaint or refuse to allow the inspection to take place, knowing that for a penalty to be charged HMRC must demonstrate to the tribunal that the inspection was reasonable.
	The IT enhancements planned by HMRC will improve the handling of individuals' tax details and will allow HMRC to identify incorrect payments earlier. That will mean that many overpayments will be repaid automatically without the need for a formal claim. In many such cases, a refund is due whether or not the taxpayer makes a claim, so the time limits to which the amendment refers do not apply.
	I did not address amendment No. 39 in detail as we debated it in Committee. It might be helpful, however, if I make the following comments. The seven days in the proposed legislation is a minimum period of notice, and usually a longer period would be allowed if necessary. We were asked what would happen in the event of a holiday, perhaps of a fortnight. That would not be a problem, as the taxpayers would have a reasonable excuse for delaying a visit until the conclusion of their holiday. Therefore, based on the requirement for HMRC to behave reasonably, the problems described would not arise.
	The new aligned time limits have been warmly welcomed by external stakeholders. The application of the same time limits across taxes will be a useful simplification for taxpayers. They will also allow HMRC to work in a joined-up way across taxes when carrying out checks, which will reduce costs for taxpayers. Most welcome of all has been the earlier certainty for taxpayers that will be provided by reduced time limits as they relate to direct taxesHMRC will only be able to go back for six years when the taxpayer has not taken reasonable care to get their tax right. Six years is a substantial reduction from the 20 years that currently applies. HMRC will continue to accept later claims when the taxpayer has a reasonable excuse.
	I will keep the effectiveness of HMRC's publicity and the planned pay-as-you-earn system improvements under review to ensure that people are prepared for the new time limits from 1 April 2010. A considerable period will pass before the new powers take effect, which is sufficient for not only Parliament, but the representative groups of taxpayers who are also closely scrutinising this work to be satisfied that the powers are appropriate.
	The hon. Member for Dundee, East asked about computer records. As I said in Committee, computer records are no different from paper records. If HMRC wishes to inspect any such documents, they must be relevant to the taxpayer's tax position, and must be in either the taxpayer's or the third party's power or possession, and if they are stored abroad, they must be made available in the UK. All those requirements would be necessary. I know the hon. Gentleman is particularly concerned about where the computer or website, for example, is outside the control of the individual. It would be possible to demonstrate that to HMRC. As I have said to him, HMRC would have to liaise with foreign authorities, perhaps in the jurisdiction where the records are sited, in order to obtain the information through a formal exchange of information. To that extent, the individual taxpayer would step back in order to allow a process of dialogue with the tax authorities in the other jurisdiction to take place. The application of penalties is also no different.
	The hon. Member for Taunton asked about what HMRC is doing to protect taxpayer data. I refer him to the Independent Police Complaints Commission and Poynter reports. There is a long list of steps that HMRC is taking, and I encourage him to look at the reports in detail because they give the scope and nature of those improvements.
	I commend the Government's amendments to the House, and I hope that Members will resist those amendments that the Opposition parties choose to press to a Division.
	 Question put and agreed to.
	 Clause read a Second time, and added to the Bill.

New Clause 5
	  
	Coming into force of Part 7

'The provisions contained in Part 7 of this Act shall not come into force until
	(a) the Treasury has prepared and laid before the House of Commons a report setting out the safeguards available to taxpayers and third parties in respect of HMRC's powers contained in Part 7 of this Act; and
	(b) the House of Commons has by resolution approved the report.'. [Mr. Gauke.]
	 Brought up, and read the First time.
	 Question put, That the clause be read a Second time:
	 The House divided: Ayes 214, Noes 295.

Question accordingly negatived.

New Clause 19
	  
	Taxpayers' charter

'(1) The provisions of Part 7 of this Act shall not come into force until the condition set out in subsection (2) has been satisfied.
	(2) The condition referred to in subsection (1) is that the Treasury has, by regulations made by statutory instrument, provided for the introduction, by no later than the passing of the Finance Act 2009, of a Taxpayers' Charter.
	(3) Regulations under subsection (2) must
	(a) specify the statutory rights of the taxpayer, including providing for a right to appeal against an action or decision of HMRC, and
	(b) specify the statutory duties of the taxpayer, including
	(i) notice periods to which the taxpayer must adhere,
	(ii) documents to which the taxpayer must allow access, and
	(iii) penalties which may be levied on the taxpayer for failure to comply.
	(4) Regulations under subsection (2) may not be made unless a draft of the instrument containing them has been laid before and approved by the House of Commons.'. [Mr.  Jeremy  Browne.]
	 Brought up, and read the First time.
	 Question put, That the clause be read a Second time:
	 The House divided: Ayes 214, Noes 299.

Question accordingly negatived.

Clause 128
	  
	Set-off: England and Wales and Northern Ireland

Amendments made: No. 24, page 81, line 12 after '129', insert
	'and any obligation of the Commissioners to set the credit against another sum'.
	No. 25, page 81, line 20, leave out paragraph (a).
	No. 26, page 81, line 30, at end insert
	'( ) In this section references to sums paid, repaid or payable by or to a person (however expressed) include sums that have been or are to be credited by or to a person.' [Jane Kennedy.]

Clause 129
	  
	No set-off where insolvency procedure has been applied

Amendments made: No. 27, page 82, leave out line 4 and insert
	'(b) there is a post-insolvency credit in relation to that person.'.
	No. 28, page 82, line 6, at end insert 'in relation to the person'. [Jane Kennedy.]

Schedule 39
	  
	Time limits for assessments, claims etc.

Amendment proposed: No. 4, page 413, line 21, leave out paragraph 12. [Mr. Gauke.]
	 The House divided: Ayes 212, Noes 300.

Question accordingly negatived.

New Clause 2
	  
	Treatment of siblings for purpose of inheritance tax

'(1) Section 18 of IHTA 1984 is amended as follows.
	(2) In each of subsections (1), (2) and (3) for or civil partner substitute , civil partner or sibling.
	(3) After subsection (4) insert
	(5) In this section sibling means a brother or sister with whom the transferor had lived in the same household for not less than ten years before the transfer..
	(4) In the title for or civil partners substitute , civil partners or siblings.'. [Mr.  Frank  Field.]
	 Brought up, and read the First time.

Frank Field: I beg to move, That the clause be read a Second time.

Mr. Speaker: With this it will be convenient to discuss the following amendments: No. 1, in clause 8, page 3, line 29, leave out 'and civil partners' and insert ',civil partners and siblings'.
	No. 2, in schedule 4, page 136, line 9, leave out 'or civil partner' and insert ',civil partner or sibling'.
	No. 3, in page 136, line 11, at end insert
	'(1A) In subsection (1) sibling means a brother or sister with whom the deceased person had lived in the same household for not less than ten years before the person's death.'.

Frank Field: I am grateful for this opportunity to move the new clause and speak to the amendments, but I will not be pressing them to a vote because I have learned that the Conservative Opposition are not going to vote on them tonight, although we have the votes to win. I do not think that it is fair on Labour Members to ask them to vote against their Government just for the sake of it, when we cannot win. So the message can go out clearly to the country that we might well have got change tonightthe Liberal Democrats and the nationalists were coming in with usbut sadly, the Opposition votes have crumbled. There is a case to answer, however, and I very much hope that the Economic Secretary will respond to the main points in the debate.
	When historians write up the Labour Government, the two changes they will pick on as the most lasting are the ban on smoking and the establishment of civil partnerships. Both of them changed in a significant and good way the nature of our society, one because it used the law to set [ Interruption. ] It is interesting that my hon. Friend the Member for Telford (David Wright) is laughing; we may be so hard pushed at the election that the Government may have to fight it on those measures, so it would be well worth listening. If my seat was marginal, I would be desperate to find some good messages to impart to the electorate. Let us return to the debate.
	The law banning smoking has changed behaviour, and with civil partnerships we have rewarded the loyalty and faithfulness of couples of the same sex. When those measures went through we became a more civilised society on both fronts. The new clause would try to extend that approach for siblings who have made a home together, many of whom, as a result of the current duties paid on property at death, have to sell their home and start all over again. I did not table the new clause as a plea that such people should have special tax status or because they are siblings living together, they should be exempt from tax, but merely so that, as for married couples and those in civil partnerships, the tax would be delayed until the second sibling had died.
	Of course, it is right that the Treasury should be worried when well-meaning souls try to move amendments that sound very good on the surface but could be used for tax avoidance purposes. That is why the new clause includes a requirement that siblings would have had to live together for at least 10 years before the provision would take effect. Clearly, given people's ability to manoeuvre around the tax system, if there were no such bar, it would pay them to move in when they knew a sibling was dying. Nobody is in favour of that. We want to reward decent behaviour. Many siblings affected by the current arrangements would undertake civil partnerships if the law allowed them to do so, but it does not.
	I ask Labour Members who oppose the proposal to think back to the time before civil partnerships. There were Members on the Labour Benches, and certainly some on the Conservative Benches, who thought that passing such an Act was against a law of nature, but once it was passed it was extraordinary how quickly people thought of it as a normal arrangement. One should reward such arrangements through the legal or tax systems, as would have occurred if there had been enough votes to support my proposal to give siblings the right to keep their family home until the second sibling dies. That is the point of the new clause, and I hope that I have explained its objectives.
	I fear that a message will go out from the Chamber that there are not enough votes to carry the proposal, but I believe it will be carried before too long, and I look forward with interest to hearing what the Minister and the Conservative spokesman say. I think we may hear a slightly more progressive line from the Liberal Democrats. I commend the new clause to the House.

David Gauke: I congratulate the right hon. Member for Birkenhead (Mr. Field) on bringing about this debate and raising the issue of siblings and inheritance tax. As he has already suggested, we are not inclined to support the new clause. I shall explain why, but it is not because we do not appreciate the legitimate concern felt by many siblings who have lived together for a number of years. I suspect that he was most concerned about cases in which, as a result of the inheritance tax charge falling on the estate when one sibling died, it would be necessary for the surviving sibling to sell the propertythe joint home. That is an understandable concern; our party, and, I suspect, Members of all parties, have a great deal of sympathy for people faced with those circumstances.

Kitty Ussher: Does the hon. Gentleman not agree that if, say, in 2010 the individual allowance were 350,000 per person, and two siblings jointly owned their house equally, the house would have to be worth more than 700,000 before inheritance tax even became an issue?

David Gauke: Yes, I do agree with that. Indeed, to some extent, the Minister anticipates my argument. I will set out why, although we have sympathy with the casefrom her tone, I am not sure that she shares that sympathythe new clause is not necessarily the right way of addressing it. The proposal is not the way in which we would address the issue, but we would address it, none the less.

Jeremy Browne: As the hon. Gentleman acknowledges, the Minister is surely right that if the threshold were 350,000, the house in question would have to be worth 700,000. However, that would be just as true for a married couple, or a same-sex couple in a formalised partnership. The question that the Minister needs to answerthe hon. Gentleman may choose to put it to her in these termsis: why should two women who have established a civil partnership be eligible for that relief, but not two sisters who choose to live together in a house worth more than 700,000?

David Gauke: The hon. Gentleman makes a fair point, although I think that it will fall on both the Minister and Conservative Members to answer the question: why not treat siblings as a separate category, as we rightly do married couples and those in civil partnerships? Our concern has to do with the threshold, but what the Minister says is absolutely right. We are not talking about all siblings who live together; we are talking about those with a relatively large estate. However, equally, it would be fair to say that an estate of 700,000-plus is not necessarily that unusual, and we are not talking about only the very wealthy. That point is worth bearing in mind with regard to inheritance tax more generally.
	As house prices have risennot so much in recent months, but over the previous 12 to 15 yearsmany more estates are being affected by inheritance tax. That is a legitimate concern, and I congratulate the right hon. Member for Birkenhead on raising the issue. I certainly see that happening in my constituency: relatively modest houses are now above the inheritance tax threshold, so there is a legitimate concern. Of course, many people who do not have an estate above the threshold aspire to have such an estate. In many respects, because of the way in which inheritance tax has developed over recent years, it now affects far more families and people who hope one day to have an estate of that sort of size.
	There is a legitimate problem with inheritance tax. The most prominent case is that of the sisters from Marlborough, Sybil and Joyce Burden, who have written to every Chancellor of the day since 1976some eight Chancellors so far, although one suspects that the turnover may increase in the next couple of years or so. The sisters have also taken their case to the European Court of Human Rights, where their application was recently rejected. I think that our tax law should be determined by the conclusions of our debates about such matters in this House, not by the European Court of Human Rights in Strasbourg. None the less, the sisters have raised an important issue, particularly in the context of the surviving sibling having to move out to pay the IHT liability.
	I suspect that the Economic Secretary may make two arguments in that context: first, that it is possible to pay off IHT over a period of 10 years or so, and one can defer some of the liability; and secondly, that equity release is available. Some of the equity in the property can be released, but given that many people have saved all their lives to own a property outright, there is, unsurprisingly, a great reluctance to do what essentially is remortgaging part of it to fund a tax liability. My concern with the right hon. Gentleman's proposal is about where precisely we draw the line. The line is currently clear with regard to married couples and civil partners, but what about, for example, long-term carers for elderly parents? The same case about protecting the family home could be made. What about adult disabled children who live with their parents? Again, a humane and reasonable case could be made for them. One is left with the question of where to draw the line.

Lynne Jones: If that is the case, why did the hon. Gentleman not consider tabling amendments that would have extended the provision to those groups? I do not think that we should have the provision at all; the money that has been spent on allowing the transfer would have been better spent elsewhere in the public sector, and particularly on free long-term care. The provision has been introduced, however, and people think it unfair that siblings and the other groups that he has mentioned should be excluded.

David Gauke: I am grateful for that intervention, because it takes me on to the point that I was going to make. The reason why we do not support the new clause is that it is not bold enough. Instead, we propose a very simple way of addressing such concerns. I notice from the press reports about Sybil and Joyce Burden that their joint estate is estimated to be worth 900,000. Rather than provide additional exemptions for siblings and the other groups that I have mentioned, we propose simply to raise the inheritance tax threshold to 1 million. It would address the concerns of the vast majority of siblings who are affected, because we would be talking about a joint estate of 2 million. We would also be talking about the carers and the disabled adult children. Indeed, we would be talking more broadly.
	Our proposal would address the essence of the right hon. Gentleman's concerns, and although we have sympathy with what he is trying to do, a simpler way of dealing with siblings, the other groups that we have mentioned, many other families who have acquired a relatively modest home in a part of the country where house prices have risen considerably, and people who have saved and built up a substantial estate, is to take them out of inheritance tax altogether, so that it becomes a tax for the very wealthya tax on millionaires, not on fairly average families.
	That is the policy that was announced at our party conference in October last year. It is clearly enormously popular, and it caused the Government to address the issue of inheritance tax in their autumn statement last year, when they announced the transferable nil-rate band. Like the right hon. Member for Birkenhead, the Government see that there is a problem with inheritance tax. However, if we want a Finance Bill that addresses those concerns, we may have to wait for a couple of years.

Rob Marris: I understand why the new clause was tabled and I have some sympathy with the predicament that it raises. I should say in passing that the new clause may have a technical defect. I lived with my sister for 15 years, then I turned 18 and went to university. I do not know whether my right hon. Friend the Member for Birkenhead (Mr. Field) has been in such a position, but my point is that there are young people who live together as siblings for more than 10 years. However, that is not why I am speaking against my right hon. Friend's new clause.
	Last year, about 6 per cent. of estatesabout 34,000 of thempaid inheritance tax. This year, because of the changes and the doubling up of husbands and wives and civil partners, it is predicted that about 4 per cent. of estates, or about 23,000 of them, will pay the tax. However, what is important is not just the absolute numbers but the principle of the issue. We need to start with how we got to this position.
	One of my degrees is in sociology, and that colours how I approach this issue. In most societies, inheritance sprang up to bolster the family and pass property to childrenthink of peasants and the issues in different European countries about whether there is primogeniture and so on. Our inheritance tax is part of a historical follow-through of that in respect of fostering family life. That is why there are exemptions between husbands and wives and now, quite properlyas highlighted by my right hon. Friend the Member for Birkenheadbetween civil partners. That is a welcome step forward, as it is to do with a relationship that, historically, most societies sought to bolster to a greater or lesser extent because of the involvement of children.
	Some civil partners have children and some do not; that takes us back to the debate on the Human Fertilisation and Embryology Bill, which we will not go into here. However, a lot of that debate revolved around the provision of a social unit that had adequate means of providing a stable environment for the children. That was particularly significant historicallya man might have been killed in the war and left a widow with young children, for example. For me, that is the historical background and how we have got where we are.

Frank Field: On the historical background, I should say that the prayer book originally said that the purpose of marriage was to beget children. A more modern version says that it is for couples to form relationships. I am looking forward to the next stage of my hon. Friend's speech.

Rob Marris: It is to do with encouraging stable relationships. Historically, although not so much today, that issue revolved around children, whether in respect of procreation or the change in the wording that we now have. The same imperative does not apply to siblings. I stand to be corrected, but I take it that when we are talking about siblings in this context, we generally mean blood siblings or, because of the 10-year thing, foster siblings who have had a long-standing relationship. We are generally thinking of older people who have chosen to live together, such as Sybil and Joyce Burden. There is not the same social imperative to have a tax regime to bolster that kind of relationship, desirable as it may be for people to live in stable relationships.
	As the hon. Member for South-West Hertfordshire (Mr. Gauke) said, we have to ask where we draw the line. Do we take it to cousinsblood relatives who have chosen to live under the same roof together for many years and do so until one of them dies? Do we take it to people who are best friends, albeit platonic? Carers have been mentioned. My initial reaction is that we might like to consider including those who care for elderly parents, because I regard it as desirable to encourage adult offspring to do that. However, when one of the parents died, if they were married or in a civil partnership the property would pass with no inheritance tax to the surviving parent, who would probably still need looking after. When the second parent died, it would not seem quite the same, although it could appear that way to the carer, who would then have to move out of what they regarded as their family home.
	My right hon. Friend the Member for Birkenhead mentioned deferred tax. As I understand it, it is not just a question of that. We are talking about exemptions, as we have seen with the provisions introduced in the Bill on retrospective transferable allowances between spouses. I declare an indirect interest in that my mother, who has been widowed for 19 years, inherited the whole estate without paying inheritance tax, and that doubling up will affect what she passes on to her children. It is not just a question of deferred tax but of less tax being paid. The mere fact that less tax is paid is not a reason to walk away from something if the principle is right, but I am not sure that it is. The 10-year transition period to which the hon. Member for South-West Hertfordshire referred is an option that could be used. However, I am not so sure about equity release schemes, which are not necessarily something that we want to encourage. Although there can be good schemes offered by reputable financial institutions, there are a lot of horror stories about sharks.

David Gauke: I do not disagree with what the hon. Gentleman is saying. I merely wished to highlight some of the arguments, the most persuasive of which is the one about where we would draw the line.

Rob Marris: I agree with the general proposition put forward by my right hon. Friend the Member for Birkenhead about rewarding decent behaviour, but that gets us into the question of where we draw the line and how much state support there is for that.
	I would say to my hon. Friend the Economic Secretary that we should consider a form of deferral of inheritance tax. There is the classic example of two sisters who have lived together all their lives, or for the last 30 years of their lives. One is aged 80 and one is aged 70, and the 80-year-old dies. The 70-year-old might live for another 20 years, beyond the 10-year paying-off period for inheritance tax, and have to move out of a home that in some cases will have been the parents' home. At the time that her 80-year-old sister dies, the 70-year-old might have lived in the house for 70 years and fully expect to live there for the rest of her life but be faced with an inheritance tax bill because house prices have gone up. That will involve only a small number of people, but we are looking at the principles. There could be some tax deferral mechanism so that when the younger sister dies 20 years later, that is when the house is sold and the inheritance tax becomes payable, albeit perhaps with interest rolled up over that 20-year-period. It would be similar to the transitional arrangements for people who go into care and are selling their houses for that reason. We need to think about slightly more creative mechanisms to adapt to the ways in which people live.

Lynne Jones: Why should not those arrangements also apply to married couples?

Rob Marris: They could apply to married couples, but there is a social imperative, to which I referred in a sort of pop sociology way, in the context of why society does what it does, and its being comfortable with what it does. In the case that we are considering, and in trying to square the circle, I am content with the exemption for spouses and civil partners. Perhaps it would be best to have an open-ended periodthings depend on the age difference between the siblings, the health of the older one, the one who dies first, and so onbut it could be up to 30 years, in which the inheritance tax bill is deferred until the second sibling dies or sells the house, perhaps to move into a sheltered bungalow.
	I urge my right hon. and hon. Friends on the Treasury BenchI imagine that they will not accept the amendmentsto consider some alternative arrangements to lessen the pressure on siblings such as Sibyl and Joyce Burden, but not to change the basic idea that exemptions apply to spouses and civil partners.

Jeremy Browne: I wish to draw on a personal experience, which, although not directly relevant, is sufficiently relevant to illuminate our debate. My grandmother, who married Mr. Browne, was called Miss Graywe are a rather monotone family. She was the oldest of four children and she died in 2000 in the house in which she was born in 1913. There were four childrentwo boys and two girls. Both sons were killed in the second world war and their names are on the war memorial in the church near the house, and my grandmother and her younger sister, my great aunt, survived. They continued to live in the house in which they were born until the day that they died. My great aunt died more recently.
	My grandmother married Mr. Browne and that is why the example is not directly applicable. However, I wanted to make the case because it is a perfect example of the sort of people whom the new clause would assist. Many women of that age did not get married and had to make different arrangements after the second world war that they would not have had to make in other circumstances, if such a seismic disruption to society's normal development in the United Kingdom had not occurred between 1939 and 1945. Those women made exceptional arrangements. Many were sisters who lived initially with their parents and then, when the parents died in the 1950s and the 1960s, lived together in the houses in which they had been born or brought up. The full implications are felt only when one sister dies many years laterthe social legacy of the second world war has lasted many decades. Sisters in those circumstances are aghast that the inheritance tax burden should apply to them. There is therefore a compelling case for the new clause.
	The Economic Secretary said in her intervention on the Conservative spokesman that inheritance tax would apply only to those who lived in what she implied was a posh house, which is worth more than 700,000. I appreciate that the number of houses that are worth that sum is falling by the day. This Government are perhaps trying to tackle the problem of the inheritance tax burden in their unique way. There are probably better methods, but they are doing their best. The threshold is not yet as high as 700,000, but the moral case is no different for sisters who were born in a house that is now worth 800,000 from that for those living in a house worth 600,000. They did not choose to be born in a house of a specific valueit is their home, the place in which they have lived for many decades, and they expect to live there for the rest of their lives.
	I urge the Economic Secretary not to regard this as a wedge issue, with the Labour party playing to a core constituency and saying, It doesn't really matter because we're only talking about rich people. They're the sort of people that the Conservatives speak up for and we can distinguish ourselves from them by saying that our priority is not to help rich old people but other groups in society. In the case that we are considering, people in a house now worth 700,000 are just as worthy of support, compassion and assistance as those whose houses are worth a different amount.

Lynne Jones: Surely the Government would not say such a thing, since they have acted to cushion married couples who live in, to quote the hon. Gentleman, posh houses.

Jeremy Browne: I am trying to explore the Government's position, because it is difficult to understand fully the motivation behind the policy, although they seem to be very responsive to speeches made at Conservative party conferences. The only guidance that I would give the Labour party is this: whenever it tries to ape the Conservatives, its woes get worse rather than better. Tomorrow we are going to spend a lot of time talking about taxation of non-doms.

Rob Marris: You are.

Jeremy Browne: Actually, nearly all tomorrow's new clauses and amendments amount to yet more damage limitation

Madam Deputy Speaker: Order. Time is going on, but we have not yet reached tomorrow's debate.

Jeremy Browne: Indeed. We should not get ahead of ourselves by moving on to the treats that we will be discussing tomorrow.
	Let me return to the matter at hand, which is an important one. A number of national newspapersfrom memory,  The Daily Telegraph has been particularly prominenthave campaigned strongly on the issue, so people will want to understand the positions that the different parties have taken, and in particular the Conservative party's reservations.
	I should be interested to hear the Economic Secretary's intellectual justification for saying that there is a significant material difference between, to take a hypothetical example, two womenlet us say two 90-year-old womenwho choose to enter a civil partnership, and therefore immediately become eligible for those benefits, and two 90-year-old women who have not met in the past few months, but who have lived together in the same house as sisters for the past 70 years. Indeed, as I said in an intervention, such a civil partnership could have been motivated by tax reasons. That would be a shamealthough it would not be beyond our comprehensionwhereas it could not possibly be the case for the two sisters who had lived together for many decades.
	The Economic Secretary said that the situation would apply to very few people. Of course that is the case, but that only strengthens the argument; given that the costs are so minute, the Treasury need not worry unduly. In fact, the Treasury could be quite charitable and expand the scope of the scheme. The costs are so small that the Treasury could win a lot of good will from people who feel that they are unfairly penalised, at a small burden to taxpayers as a whole.
	There are a few points in new clause 2 on which it is worth reflecting. One of them concerns the 10-year living together period. I assume that 10 years is an arbitrary figure, although any figure will inevitably be arbitrary, because it is quite hard to come up with a figure that is based on anything other than an arbitrary assessment. Some people might think that 10 years is quite a short period of time, because we are typically talking about two sisters or two brothers who have lived together for their whole lives. With higher house prices, brothers and sisters are increasingly buying flats together, in London or other parts of the country, because they cannot afford a mortgage on their own, they do not have a relationship with a partner and they regard buying a property with their brother or sister as the most safe and stable basis on which to proceed. In some cases, therefore, 10 years may be quite a short period of time. The Government may be more accommodating if that period were longer, and we could rightly consider that.

Frank Field: The 10-year period was picked because I thought that there needed to be some ring-fencing of the new clause. There are no worthwhile figures as yet for how long civil partnerships last, but 10 years is longer than the average marriage. One might say that that is because so many marriages break up so early, thereby dragging the average down, but that is the average figure.

Jeremy Browne: I am grateful to the right hon. Gentleman for that intervention, because he has helpfully said that the figure was as un-arbitrary as he could make it, even though there was inevitably an arbitrary element involved. It is obviously necessary to have a figure, because we do not want people exploiting the provisions for tax purposes, even though that might not be foremost in their mind as they approach their imminent demise. I only suggest that, were the figure to be higher, the proposal would probably achieve its objective in terms of the type of people that we all have in mind while providing an even greater safeguard against potential abuses.
	Hon. Members have asked where the provisions should stop. That is a fair point, and I hope that the Minister and the right hon. Member for Birkenhead (Mr. Field) will engage seriously with it. Stepbrothers and stepsisters, for example, would presumably come under the provisions. It would be strange if they did not, because it is increasingly prevalent nowadays for people to have stepbrothers and stepsisters rather than for all their siblings to have the same two parents. We could also consider other blood relatives. The hon. Member for Wolverhampton, South-West (Rob Marris) talked about cousins, but should we also consider second cousins? We could also consider people who have been adopted, carers and other categories of long-term cohabitants.
	It is reasonable that the Government should look at all the implications of introducing a measure of this kind. However, it upsets people when the state appears to exercise an excessive and somewhat arbitrary power over individual citizens who are going about their business and who feel that they are being unfairly victimised. This has been a motivation for newspapers and other campaigners, and it has real resonance for people to whom the provisions do not apply. They instinctively feel that it is wrong for a very old lady to have to leave the home that she has lived in for perhaps 90 or 95 years because the sister with whom she has lived for most of that period has died.
	The onus is on the Government to look into how we can address this issue. The Minister was quite right to say that the costs involved would be quite minute in the grand scheme of things. There would be no great financial barriers to making progress; it is only a matter of will.

Kitty Ussher: This has been an interesting and useful debate that will enable us to tease out some of the issues that have been considered. I would like to place on record my thanks to my right hon. Friend the Member for Birkenhead (Mr. Field) for raising this matter and for constructively engaging with us on it.
	Two separate issues are involved, and perhaps it would be helpful to deal with them separately. The first concerns a point of principle; the second compassionate issues. Perhaps this will answer the point made by the hon. Member for Taunton (Mr. Browne). It is worth saying at the outset that we all have huge respect and admiration for anyone who is able to sustain a long friendship and relationship, such as those that exist between long-term cohabiting siblings. There are many families in which such relationships break down, and I have huge respect for the kind of relationships that we are talking about today.
	However, I do not believe that a parallel can be drawn between such relationships on the one hand, and marriages and civil partnerships on the other, as the latter involve particular legal and financial characteristics. The civil partnership issue is rather a distraction in this context. We are talking about marriage, including marriages involving same-sex couples, and the law and society view such marriages in a fundamentally different way compared with other close relationships such as blood relationships or close friendships.
	This issue has been tested in the courts, including the European Court of Human Rights in the case of Burden and Burden  v. the United Kingdom, to which hon. Members have referred. The point was specifically discussed, so let me read from the findings of 29 April this year. The court said:
	The absence of... a legally binding agreement between the applicants
	in this case, the two sisters
	renders their relationship of cohabitation, despite its long duration, fundamentally different to that of a married or civil partnership couple.
	It went on to say that
	marriage remains an institution which is widely accepted as conferring a particular status on those who enter into it.
	That is the crucial point. Our policy on inheritance tax recognises the special position of marriage and its equivalent for homosexual couples, and we think a line should be drawn at that position. We will thus resist the new clause and amendments proposed by my right hon. Friend the Member for Birkenhead.
	The hon. Member for Taunton was entirely right when he said that the cost of accepting the amendments would be low, despite the point of principle that I have set out, but the precedent from crossing the line could potentially open us up to far wider costs. We have already debated some of the issues, but if we accept the provision for long-term cohabiting siblings, where do we draw the line? Should it be extended to cousins, parents or grown-up children, for example? Why, then, for 10 years, and not for nine, eight or seven years; and why not for flatmates or any other long-enduring relationships or even business relationships? Once we had conceded the first point, the potential cost to the Exchequer could, I feel, be extremely large. That is the point of principle.

Jeremy Browne: Given that the Minister said in her opening comments that this provision would apply only to a very small number of people, because most do not have the good fortune to live in an expensive house, surely the costs would not be that large, even if she conceded quite a few different cases. By her own estimation, 96 per cent. would not be eligible for the benefit because their house would not be sufficiently valuable.

Kitty Ussher: My point was that the overall costs would be far larger than simply the cost of accepting the particular amending provision. We have not costed it in detail because we have not looked at the number of long-term relationships that would be covered. My point was simplethat the cost of implementing the amending provision might be low, but that by conceding the principle, we could open ourselves up to far wider costs. That is a secondary point, however, as it is the unique institution of marriage and its gay equivalent that makes the point of principle here.
	My hon. Friend the Member for Wolverhampton, South-West (Rob Marris) spoke extremely well. He mentioned the issue of where we draw the line and he was right technically when he said that if we accepted the new clause, it would apply to any siblings who had lived together for any period of 10 years at any stage of their lives, which I am not sure was the intention behind what I guess was a probing provision.
	Let me move on to the compassionate issues. We have heard examples in respect of which our hearts automatically go out to elderly people who obviously do not want to be forced to leave the home that they have lived in for many decades, perhaps even for the whole of their lives. Let me try to tease out some examples. I said earlier when I intervened on the hon. Member for South-West Hertfordshire (Mr. Gauke) that once the limit was raised in 2010-11, the estate would have to be worth more than 700,000 before inheritance tax even became an issue. Let us think about an example where a house is worth 800,000a round number, which makes it easier to work with. Let us suppose that such a house is owned equally by two siblings who have lived in it for a long time, perhaps having inherited it from their parents some time ago. If one of the siblings dies, the limit in 2010-11 will be 350,000, so inheritance tax will kick in on the difference between that and 400,000namely 50,000. It kicks in at 40 per cent., so the inheritance tax bill is 20,000.
	Two things could then happen. The bill could be paid over 10 years, which would mean 2,000 a year. I do not know how that equates to the council tax bill on the house, but it might be possible for the individual to meet the additional amount. If not, various options would be available. If even an extremely elderly person was facing a charge of 20,000 and owns an asset of 800,000, it would be fairly easy to remortgage to get the necessary amount. Although on compassionate grounds I have sympathy for the individual on losing their elderly sibling, I am not sure that there are grounds for the state to intervene.
	I want to touch on the point made by my hon. Friend the Member for Wolverhampton, South-West about deferring the charge, even beyond phasing it for 10 years. In a sense, by remortgaging to get the capital required, a person is using the private market to do exactly that. With regard to the extremely exceptional circumstances of an individual in a house worth about 800,000 who is unable to access any of those possibilities, the HMRC inheritance tax manual allows situations involving genuine hardship or serious difficulty to be considered on a case-by-case basis. In extreme cases, therefore, there is a certain amount of flexibility, which would include postponing the payment of all or part of the tax due. Given the figures involved, however, there will not be many such extreme cases.
	The hon. Member for South-West Hertfordshire said that the subject under consideration affects average familieshe used that phrase. The median house price in England and Wales is 180,000, so I do not know what his definition of average is, or what the average house price is in his constituency, but from where I am standing, a property worth 700,000 is in no way average.

David Gauke: If inheritance tax affects only a tiny or very small minorityI do not know what phrase the Economic Secretary would usecan she explain why the centrepiece of the pre-Budget report, which was after all prepared at a time when the Prime Minister was considering going to the country, was changes in inheritance tax?

Kitty Ussher: The hon. Gentleman completely misses the point. Our proposals related to what happens when property is passed down to children. That is not what we are discussing today. We are discussing whether the second sibling should be forced to leave the house. Of course, it has always been the case that no inheritance tax is paid when one spouse passes their part over to the other spouse.

David Gauke: I fully accept that the amendment relates to siblings, but as the Economic Secretary raises the point about inheritance tax being an issue only for the very wealthy, can she explain why the centrepiece of the Government's pre-Budget report last October, in the run-up to a potential general election, was changes to inheritance tax?

Kitty Ussher: I repeat that the hon. Gentleman misses the point. First, we raised the threshold up to 350,000 from 2010-11, and made the commitment that it will continue to rise with inflation, including house price inflation. Secondly, we made it absolutely clear that the zero relief could be transferred when the second parent died. As I said, that is a different point.
	The interesting thing that came out of the discussion on the pre-Budget report, as the hon. Gentleman has just confirmed, is that the Conservatives would raise the limit to 1 million. I am absolutely clear that that is not a good use of taxpayers' resources. I am not sure where he would find the money to pay for it. Effectively, the proposal would take at least 1 billion and give it to people whose assets already make them millionaires. When a certain amount of public money is available, it is right to spend it on something that benefits genuinely average families, not millionaire estates as he proposes.

Rob Marris: On a slightly tangential matter, I have a constituent who was widowed in 1969 and remains a widow, but who cannot do the doubling up, to use the vernacular, because she was widowed so long ago. She did not get real benefit from the inheritance tax provisions when her husband died, but she was adjudged technically to have benefited from them, because of their wording. I do not expect my hon. Friend to deal with that matter tonight, but I hope that she can look at it again. I do not know what the cut-off date is, but a small number of people, including my constituent, are caught.

Kitty Ussher: We announced that we would backdate the measure so that it covered existing widows and widowers, but I should be happy to examine the specific case that my hon. Friend has raised.

David Gauke: My I endorse what was said by the hon. Member for Wolverhampton, South-West (Rob Marris)? We raised the point in Committee, and he is absolutely right. I know that the Government's proposals date back to some years ago, but it is the case that if the first spouse died before either 1974 or 1972, he or she will not benefit from the nil rate band. We urge the Government to reconsider.

Kitty Ussher: I do not know whether that is yet another example of an unfunded spending commitment from the Conservatives, but we felt that 35 years was a fairly decent point at which to draw the line.
	The point of principle is beginning to emerge. We want to make it clear that there is something special about marriage that makes it necessary for a nil band rate to apply. While we have sympathy and compassion for elderly people who have been living together for the vast majority of their lives, we feel that in view of the value of the estates concerned, Government intervention is not required except in the circumstances that I have described.
	I welcome the debate, but on that point of principle, I urge the House to reject the new clause.

Frank Field: I beg to ask leave to withdraw the motion.
	 Motion and clause, by leave, withdrawn.
	Further consideration adjourned. [Siobhain McDonagh.]
	 Bill to be further considered tomorrow.

DELEGATED LEGISLATION

Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6) (Delegated Legislation Committees ),

Disabled Persons

That the draft Rail Vehicle Accessibility (Interoperable Rail System) Regulations 2008, which were laid before this House on 21st May, be approved. [Siobhain McDonagh.]
	 Question agreed to.
	 Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6) (Delegated Legislation Committees ),

Constitutional Law

That the draft National Assembly for Wales (Legislative Competence) (Social Welfare) Order 2008, which was laid before this House on 22nd May, be approved. [Siobhain McDonagh.]
	 Question agreed to.
	 Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6) (Delegated Legislation Committees ),

Consumer Protection

That the draft Cancellation of Contracts made in a Consumer's Home or Place of Work etc. Regulations 2008, which were laid before this House on 4th June, be approved. [Siobhain McDonagh.]
	 Question agreed to.

european documents

Motion made, and Question put forthwith, pursuant to Standing Order No. 119(9)(European Committees),

Preliminary Draft Budget of the European Communities 2009

That this House takes note of the unnumbered Explanatory Memorandum from HM Treasury dated 2nd June 2008, relating to the Preliminary Draft Budget of the European Communities for the year 2009; and supports the Government's efforts to maintain budget discipline in relation to the budget for the European Communities. [  Siobhain McDonagh.]
	 Question agreed to.

DELEGATED LEGISLATION

Ordere d ,
	That the Fire and Rescue Services (National Framework) (England) Order 2008 (S.I., 2008, No. 370), dated 3rd June, be referred to a Delegated Legislation Committee. [Siobhain McDonagh.]

Modernisation of the House of Commons

Ordered,
	That Mr Iain Wright be discharged from the Select Committee on Modernisation of the House of Commons and Dr Howard Stoate be added. [Siobhain McDonagh.]

business of the House

Ordered,
	That, at the sitting on Thursday 3rd July, the Speaker shall put the Questions necessary to dispose of proceedings on
	(1) the Motions in the name of Ms Harriet Harman relating to Members' Salaries; and;
	(2) the Motion in the name of Nick Harvey relating to Members' Expenses and the Motion in the name of Ms Harriet Harman relating to Members' Home Addresses
	in each case one and a half hours after the commencement of proceedings on the first such Motion; such Questions shall include the Questions on any Amendments selected by the Speaker which may then be moved; proceedings may continue, though opposed, after the moment of interruption; and Standing Order No. 41A (Deferred divisions) shall not apply.   [Siobhain McDonagh.]

PETITIONS

HMRC Work Force Change

Tim Farron: I wish to present a petition on behalf of my constituents, members of staff at the office of Her Majesty's Revenue and Customs at Kendal.
	The petition states:
	The Petition of employees of HM Revenue and Customs, the Public and Commercial Services Union and others,
	Declares that they are seriously concerned about the future of the HM Revenue and Customs (HMRC) office in Kendal, and also similar threats facing their colleagues in Lancaster and Barrow. The proposal to close these offices will mean that local people and businesses will be left without access to these services. They are also concerned about likelihood of staff affected by the closures being able to find alternative work within the local area. They further declare their support for the PCS campaign to keep these offices open.
	The Petitioners therefore request that the House of Commons urges the HM Treasury to withdraw the threat of closure to local HMRC offices.
	And the Petitioners remain, etc.
	[P000223]

Planning (Hampshire)

Christopher Huhne: I rise to present a petition on behalf of my constituents, the residents of Botley, Boorley Green and Hedge End.
	The petition states:
	The Humble Petition of Botley and Hedge End residents,
	Sheweth that they object to the proposed Strategic Development Area to the N/NE of Hedge End and the inadequacy of the consultation and selection process.
	They represent the views of 312 residents who signed a similar petition during a public meeting on 12 June 2008 at Botley Church, and reflect the widespread views of local residents.
	Wherefore your Petitioners pray that your Honourable House shall urge the Department of Communities and Local Government to withdraw the proposed Strategic Development Area in order to embark on proper consultation and a full consideration of the alternatives.
	And your Petitioners, as in duty bound, will ever pray, c.
	[P000221]

Post Office Closures (Angus)

Michael Weir: I rise to present a petition on behalf of the citizens of the village of Glamis and surrounding areas in my constituency.
	The petition states:
	The Petition of the citizens of Glamis and surrounding area,
	Declares the Petitioners' belief that the reduction of Glamis Post Office to an outreach service will have a serious detrimental effect on the local community and will undermine efforts to encourage new businesses in rural Angus.
	The Petitioners therefore request that the House of Commons urges the Secretary of State for Business, Enterprise and Regulatory Reform to instruct Post Office Ltd. to keep Glamis Post Office open.
	And the Petitioners remain, etc.
	[P000225]

HOUGHTON AND WASHINGTON, EAST (ECONOMIC DEVELOPMENT)

Motion made, and Question proposed, That this House do now adjourn. [Siobhain McDonagh.]

Fraser Kemp: I thank you, Mr. Speaker, for giving me the opportunity of having this Adjournment debate.
	Many Members believe that economic strength and development is a fundamental building block for the people we represent. Those of us who witnessed when that did not occur in our constituencies are aware of the devastating effect it had on the people we represent and the communities we serve. It is crucial that we get that economic development and growth right, not only for existing generations but for generations to come.
	I want to concentrate on some of my constituency's local successes, and to talk about some of the challenges we face in a fast-moving global environment. Coupled with that, in no way do I want to underestimate the problems we have had in the past and the problems we still face now. Although this debate is about economic development in Houghton and Washington, East, it is fair to say that no one constituency, region or nation can address economic development in isolation from current events and the global economy, and the impact that that has on everyone we represent. When 10 years ago textile workers in my constituency working in a former mining village called Fence Houses lost their jobs because Marks and Spencer decided to source from emerging markets, that had an impact and it was a direct result of globalisation. When the Nissan car manufacturer moves towards medium and higher value cars, that is an impact of globalisation as well, because emerging markets are now starting to produce much cheaper cars; we have heard some of the announcements in India and other places, where cars can be built for $1,000 or $2,000.
	This global impact therefore affects us all, and the purpose of the debate is to raise some of the issues and to explain how I think we can respond. We must respond with a lot more creativity and flexibility than in the past, because the decision is not about whether we adapt to what is happening in the rest of the world, but how we adapt and what public policy we have, and what measures and mechanisms we put in place to make sure that the people we represent have a competitive advantage. Whether we like it or not, the train is leaving the station and we must be properly on board it. In my area and others, the growth and decline of traditional industries often took centuries, but I suspect that that will happen a lot quicker in future.
	The area I represent has learned a number of lessons that it is right I share with the House. It has learned and applied those lessons despite the dramatic loss of its core industries. It is hard to comprehend the devastating impact that the loss of those industries had, not just economically but socially, in a very short space of time. It is against that tough background that the city has made significant progress.
	I read in tonight's  Sunderland Echo that
	Sunderland's economy has been among the fastest growing in the country in the last 10 years.
	It has grown by 73 per cent. in that time. Other references to the city's economy are especially apt for this debate:
	Sunderland's success has been in regenerating its urban sites, while at the same time capitalising on the growing trends in the service and knowledge economy. The city has come a long way in modernising its economy with a flourishing service sector with big names such as Barclays, T-Mobile and BT locating here.
	The engineering sector is also thriving with Nissan at its forefront, operating the most efficient car plant in Europe.
	Growth has accelerated in the last five years, driven by stronger activity in the knowledge sector.
	While the report endorses the city absolutely, it makes the obvious pointand it is worth placing it on the recordthat some areas still require improvement. Public infrastructure is one such area, and improving it would attract more service-based companies to invest in the area. Public investment has come into the area in the past 10 yearsand there is more to comeand that has helped us to narrow the gap year on year in a range of economic indicators according to which we lagged behind massively in previous decades.
	In a further endorsement of the city council's strategy, the 2008 Cities Outlook report specifically identified Sunderland as having one of the highest rates of employment growth. A Business Inquiry report showed that growth in employment was 9.4 per cent., compared with 6.7 per cent. in the region and 3.3 per cent. for the UK. However, worklessness in the city is still higher than the national average. It has fallen three times faster than the national average in the last 10 years, and in my constituency alone we have seen a substantial reduction of 12. 5 per cent. in unemployment in the last five years. There are many reasons for that, but the overall success of the British economy has contributed massively. Various initiatives have helped many thousands of people in my constituency get back into work, but more needs to be done, and I shall give one small example. Many people need a multi-agency approach to get them back into work, and the city council believes that there should be more data sharing and co-operation between agencies in that regard.
	It is to the eternal credit of the city council, past and present, that it recognised early that our core industries were not just declining, but disappearing. Early intervention through an economic strategy was the best and most secure way to prevent our city from becoming an industrial desert. The council worked hard to attract important inward investment and to promote small, indigenous companies in the city so that they could create jobs. Against a difficult backdrop, the council had the guts and determination to sell the city and ensure that it punched above its weight. It is not surprising that the city is an award winner many times over for its approach to economic development.
	The key is not only attracting investment in the first placewhich is difficult enoughbut ensuring aftercare for the companies involved. Local and national Government have to provide facilities and work with companies that want solutions to problems. It is not just about getting them to come in and then forgetting about them. It is about working with companies over a period of time.
	As I said, the city council has won many awards, but I read recently that it also received recognition from an unusual source. I do not usually pray in aid leading members of the Conservative party but I shall make an exception on this occasion. A leading former Sunderland businessman and leading Conservative, Sir Tom Cowie, feels that Sunderland
	 It being Ten o'clock, the motion for the Adjournment of the House lapsed, without Question put.
	 Motion made, and Question proposed, That this House do now adjourn. [Mr. Michael Foster.]

Fraser Kemp: As I was saying, a leading Conservative and Sunderland businessman, Sir Tom Cowie, discussing economic development in the city, said in May 2008:
	You can't fault the council.
	That is a considerable endorsement from a leading member and supporter of and financial donor to Her Majesty's Opposition.
	We have had some welcome high-profile announcements. The Nissan decision was great news for the constituency. It was announced that Nissan would build its new model at the plant, resulting in hundreds of new jobs not just at the plant but in the supply chain, which is often based around the area. I would also like to place on record my thanks to the Government for their financial contribution to research and development and for ensuring that Nissan had all the support it could possibly ask for from the UK Government. That is a tremendous endorsement and this week the plant announced that it will have to change its shift system because of the unprecedented demand for the models that it makes. That is great news.
	There are many other good news stories. Over the past few years, some 60 international inward projects have come into the city. The projects have recently included Nike, the sports manufacturer, which has announced that its headquarters will be based in the city, accounting for about 15 per cent. of all jobs there. Although we have had setbacks, such as Northern Rock and other closures, in many instances they have been balanced by the additional growth and the announcements of new jobs in the city.
	Manufacturing remains hugely important. It accounts for 26.3 per cent. of all jobs, which should be seen against the backdrop of a national statistic of about 10.9 per cent. We also recogniseperhaps learning from the past when there was a huge dependence on specific industriesthat in order to cope in a global environment we need resilience, a wide jobs base and a wide economic base, which will mean that we do not face some of the problems that we have seen in the past. As part of that strategy, Sunderland is internationally recognised as one of the top cities in the world for technology investment.
	A heavy commitment has gone into launching software city, an industry-led initiative supported by city council finance. Some 7 million went into building the new Evolve centre in my constituency, where companies such as the home-grown international Leighton Group, under the leadership of Paul Callaghan, are based and produce innovative software. I visited the company a few weeks ago and was very impressed by what it was doing and by its work force, many of whom lived locally or had gone to local colleges and the university. They were employed in a dynamic and growing company. We were also successful in the UK Government's digital challenge bid, where we got 3.5 million towards community-based projects that deal with technology.
	That has all helped to give us a competitive advantage. It is coupled with the partnership that we enjoy with the private sector. Many people talk about partnership and it is a very popular word, but in our case the partnership is real because it is based on trust. It has not happened in just the past few years, but has been ongoing in the city. We have also provided high-quality premises not just for large employers but for small and medium-sized enterprises, too. The latest of those developments is based at Rainton Bridge in my constituency. The 54-acre site will provide about 850,000 sq ft in space, with a potential for 4,000 jobs and about 100 million in investment. Northern Rock was due to relocate staff there and we await Ron Sandler's restructuring plans, but we remain optimistic that the development will do well.
	I spoke earlier about infrastructure projects, and the city council has submitted a revised business case for improving the highway infrastructure on the central route into the development. The companies on the site supply companies such as Nissan and therefore need good infrastructure. I urge the Minister to speak to colleagues in the Department for Transport to ensure that the council's revised bid gets early consideration and a quick answer.
	Planning permission has just been awarded to Barnston Holdings, part of Nissan Land Holdings, for another 600,000 sq ft site offering 4,000 jobs. Development land is important in many urban areas and I urge the Government to ensure that public bodies such as city councils can identify and purchase sites for development well in advance.
	I also want to mention the effect that the full business rate on unused sites has on development. I understand the reasons, but the matter needs to be reviewed. We should not have detrimental fiscal policies that might act as disincentives to developers prepared to invest heavily, as part of a speculative venture, in new building in the hope of attracting jobs.
	I shall conclude by saying that our record in these matters is a proud one. The achievements speak for themselves, but I pay tribute to the many companies that have come to my constituency and the city of Sunderland. They have put their faith in the area and the people who work for them. Ultimately, it is those companies that provide the jobs, whereas our job is to ensure that there is an excellent business environment for doing business. That is all about working in partnership and ensuring that companies know that we are continually improving our education facilities and skills base.
	One lesson that we have learned is that foresight is very important, as we need to be able to predict, as far as possible, how things will turn out. In the past, economic changes that took 20 or 30 years now happen in five or 10, as many of the rules of the old economic order have gone out of the window.
	I have told the House before that I attended last year's State of the City debate in Sunderland, when a young man just leaving school asked me what sort of job he would have in 30 years' time. That made me think, as I left a school in my constituency just over 30 years ago. If someone had told me then that, today, there would be no shipbuilding, that mining would be gone for ever and that the city would produce 400,000 cars a year, 78 per cent. of which would be exported to Europe, I would have been amazed. Indeed, some of the cars even go to Japan: all that, given the state of the British car industry in the 1970s, made me wonder how to answer that young man.
	We live in a fast-moving economy, and we need to develop a public policy that is adaptable and flexible enough to enable us to meet the demands of business. If we do that, we will generate the wealth that our constituents expect will be spent on the services that they need so much.

Patrick McFadden: I begin by congratulating my hon. Friend the Member for Houghton and Washington, East (Mr. Kemp) on securing this debate about the economic development in the area that he represents, and on his thoughtful and thought-provoking speech. I know that he cares passionately about this subject, and since becoming the MP for the area he has been not just a very active but a highly effective MP for his constituency, particularly in securing the jobs, investment and development that are so important to the local economy. Given that strengthening regional economies is a key strand of the Government's policy, I very much welcome the opportunity to reflect on economic development in Sunderland.
	As my hon. Friend said, his constituency and the surrounding city have been through hard times in the past, but he showed that a great deal of progress has been made and that the city has come a great distance in recent years. I was delighted to hear the good examples that he set out of progress towards future growth. In the first five years of this decade, average year-on-year growth per head was 3.2 per centhigher than the north-east as a whole, at 2.4 per cent., and the UK average. That has contributed to a significant increase in jobs in that period, to the tune of about 15,000.
	It is most encouraging to see that developments in recent years have meant that Sunderland has moved into new and exciting areas, functioning in a global context and competing internationally, as my hon. Friend said. At a time when being connected is more important than ever for individuals, cities and countries, people in Sunderland are leading the rest of the country in embracing digital technology as part of their everyday lives. Some 66 per cent. have broadband connections, compared with a national average of 57 per cent. He mentioned the digital challenge competition, in which the city was recently successful, and Doxford International is the first business park in the UK, outside London, to be awarded world teleport status. That demonstrates the development of broadband telecommunications and the information and communications technology skills of the local work force.
	The Government are investing in both the infrastructure and the people of Sunderland through a wide range of projects supported by European regional development fund and European social fund money, including community economic development, business support, capital investment and training. Many of those projects have been under the umbrella of regional support provided by the regional development agency One NorthEast, the Learning and Skills Council and others. I also echo the tribute that my hon. Friend paid to the positive and outward-looking city council that Sunderland has had in recent years. As he said, much of the progress in the area has resulted from the partnership between the city council and those other bodies. That has led to a strong local area agreement for the city and a wider multi-area agreement for Tyne and Wear.
	Along with investment in buildings, the Government are investing in infrastructure. My hon. Friend has played a positive and important role in supporting the Sunderland strategic transport corridor, discussions on which are ongoing between my colleagues at the Department for Transport and Sunderland city council, and I will bear in mind what he said this evening. The region's interim regional transport board has recently confirmed its support for the scheme.
	The Government have also recently invested some 20 million in the Sunderland aquatics centre, which is intended to be a training centre for the 2012 Olympics. I know that the development is warmly welcomed by my hon. Friend and other local MPs. The Sunderland urban regeneration company has delivered a number of physical regeneration projects in the city, such as the Sunniside project, for which a brownfield site containing many historic buildings is being developed into new residential, retail, food and drink and leisure opportunities.
	As my hon. Friend said, there is ongoing private sector investment, and he outlined the benefits at Rainton Bridge. The presence of its own back-up generators, uninterruptable power supply and fire suppression systems has created an ideal location for disaster recovery facilities.
	The story of Sunderland in recent decades would be incomplete without mention of the role of Nissan, which has been critical to the local economy for more than two decades. Recent announcements by Nissan have provided encouraging signs of continued growth. The first of these, of course, is the new model that is to be produced. The Government were delighted to provide 6.2 million in grant aid towards an overall investment for the car of more than 55 million, split between the Sunderland site and suppliers' plants. My right hon. Friend the Secretary of State for Business, Enterprise and Regulatory Reform described the new car as a great British achievement. The second achievement is the success of the Qashqai, which has led to the recent recruitment of 800 employees, bringing the Sunderland total to 5,000. As my hon. Friend said, the plant is on target to make a record 450,000 cars this year, and has introduced round-the-clock production to the site. That record means that one in every five cars built in the UK is a Sunderland-made Nissan.
	Quarterly economic reports that we receive from businesses in the region remain broadly optimistic, even in these more uncertain times. Of course, times are more uncertain, not just here but right across the globe. We have seen, for example, the impact of the international credit crunch on Northern Rock. Here, apart from the wider economic importance of the Government's actions, the region also required support in the form of decisive action from the Government. Managing the reduction in jobs and the related issues is, I know, an issue that Sunderland is currently addressing with the support of the regional development agency and other regional partners.
	So, for our part, continuing to invest in infrastructure, in projects to develop the skills of the people and to attract new businesses are the areas that we must focus on and I am pleased to see that these are being addressed. Apart from economic issues, health issues have long been a challenge for the north-east, and it is heartening to see that as well as its impressive economic achievements, Sunderland council has been shortlisted in this category, as well as in reducing re-offending, for the annual Beacon awards. I am sure that this will only spur the council on to invest further in health improvements across the city. Sunderland has also had some success in testing new ways to help long-term incapacity benefit claimants off benefit and into sustained employment. That is critical to expanding opportunity for those who need it most. The city is 80 per cent. towards a three-year target of 500 benefit claimants into work by 2009. This is impressive, but as my hon. Friend said, it is also an ongoing challenge, with some 20,000 people in the area in receipt of the benefit as of last summer. So we have set ourselves and the north-east challenging targets to drive forward the social and economic regeneration agenda. It is encouraging to see the regional development agency playing a key role in progress in Sunderland. But it is not just funding that will enable us to continue to make the progress that is necessary into the future. We also have to streamline the bureaucracy and increase delegation, and that is what we are doing through the sub-national review. The successes in the north-east give us confidence to delegate more to the region.
	I am delighted that the area that my hon. Friend represents has done so well to increase the growth rate in recent years. I know that he and the local council have played an important part in this. The leadership that they have shown will be all the more important as the city navigates its way through what will perhaps be more uncertain economic times. I am sure that my hon. Friend will continue to play his part in the ongoing economic development, the outward-looking, positive success story and the development of the area that he has so ably represented over the years.
	 Question put and agreed to.
	 Adjourned accordingly at eighteen minutes past Ten o'clock.